RISK MANAGEMENT PRACTICES IN ISLAMIC AND CONVENTIONAL BANKS OF
NIGERIA: A COMPARATIVE ANALYSIS

Musa Hardy Muhammed 2 . Sadiq Rabiu Abdullahi & 3 Abubakar, Ibrahim ADAMU
Hardy120480@gmail.com and abdullahisadiq@gmail.com

ABSTRACT
This study examined the Risk Management Practices in Islamic and Conventional Banks of Nigeria: A
Comparative Analysis. Specifically, the study attempts to conduct a comparative analysis of risk
management practices in Islamic and Conventional banks operating in Nigeria. In reference to Islamic
banking, the study will be delimited to only JAIZ bank PLC as it is the only full fledge Islamic licensed bank
in Nigeria. The study is also specific to Nigeria, the study will covers financial data of sampled banks for
six years period between 31 st December 2013- December, 2018 and the justification for the choice of this
period is as a result of the fact that the Islamic banks in Nigeria had financial data for the period as they
begin operations in 2013. This study is an avenue for contributing to the development of risk management
practices for the Islamic banking system. The usable data for conventional banks is 136 questionnaires
while that of Islamic is 70, which gives a total sample of 206. The results show that there are significant
differences between conventional and Islamic banking in terms of the level of Risk Management Practices
(RMP), the level of Understanding Risk Management (URM), Risk Identification and Analysis (RIA), as
well as Risk Control and Monitoring (RCM). Based on the regression analysis, the result indicates that the
Islamic banks need to give more attention to Risk Identification and Analysis (RIA), whereas, the
Conventional Banks need to consider URM, RIA to improve their Risk Management Practices.
Keywords: Risk Management Practices, Islamic Banking Institutions, Conventional Banks.

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