HEDGE ACCOUNTING AND FINANCIAL PERFORMANCE OF LISTED COMMERCIAL BANKS IN NIGERIA.

Nnam, Hilary Ikechukwu; Duruzor Ifeoma Gloria

Authors

Nnam, Hilary Ikechukwu Department of Accounting, Faculty of Management Sciences. Alex Ekwueme Federal University, Ndufu-Alike, Ikwo.
Duruzor Ifeoma Gloria Department of Accounting, Faculty of Management Sciences. Alex Ekwueme Federal University, Ndufu-Alike, Ikwo.

Abstract

The study examined the effect of hedge accounting on the Financial performance of listed commercial banks in Nigeria. To achieve the objectives of the study ex-post facto research design was adopted. Secondary data was used through the use of annual reports and accounts of the selected commercial banks. The population of the study is made up of 14 listed commercial banks as at December 2022 while the sample size is 10 selected banks. Data was analyzed using panel data regression analysis. The finding revealed that (i) Hedge accounting (derivative asset and derivative liability) has no significant effect on the return on asset of listed commercial banks in Nigeria, (ii) Hedge accounting (derivative asset and derivative liability) has a significant effect on the return on equity of listed commercial banks in Nigeria. Based on the findings, the study recommends that banks should improve on accounting for hedging through derivative by fully adopting the prescription made by IFRS 7 and 9, this will give confidence to intending investors that the banks and in turn increase the return on asset of banks in Nigeria. Also, more funds should be committed to the use of derivatives for hedging against interest rate fluctuations that possibly affects the earnings of the banks. Keywords: Hedge accounting, Derivative asset, Derivative liability, Return on asset, Return on equity.

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HEDGE ACCOUNTING AND FINANCIAL PERFORMANCE OF LISTED COMMERCIAL BANKS IN NIGERIA.

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