Effect of Creative Accounting on the Financial Performance of Listed Deposit Money Banks in Nigeria

Abstract

The list of recent cases of creative accounting practices is growing as many financial institutions in Nigeria are being investigated. As a result, this study examined the effect of creative accounting on the financial performance of listed deposit money banks in Nigeria. For this study, secondary data were explored, and the study adopted an ex-post facto research design. The population of this study comprised all the nineteen (19) deposit money banks listed on the Nigerian Exchange Group as of December 31 2022, and ten (10) banks were selected as sample size using purposive sampling techniques. Data were analysed using the panel multiple regression technique (fixed effect regression model) with the help of Statistical tool, E-views version 12.0. The study found that Non-performing Loans exert a positive and significant influence on the Return on Equity of the listed deposit money banks; Capital Adequacy Ratio has a negative but significant effect on Return on Equity; Gross Earnings Ratio has a positive but insignificant effect on Return on Equity; and Loan-to-asset Ratio posited a negative but significant effect of on Return on Equity. The study recommends that proactive measures to identify, assess, and mitigate credit risks can help minimise the adverse impact of non-performing loans on financial performance.