Moderating Effect of Audit Committee Expertise on the Relationship Between Risk Management and Financial Stability of Quoted Deposit Money Banks in Nigeria

Abstract

This study examined the moderating effect of audit committee expertise on the relationship between risk management and financial stability of quoted deposit money banks in Nigeria. The study adopted an ex-post facto research design and analysed secondary data from all thirteen quoted deposit money banks over the period 2015–2024. The Generalized Method of Moments (GMM) was employed for dynamic panel estimation to address endogeneity, unobserved heterogeneity, and autocorrelation. Results indicate that credit risk management has a significant negative effect on financial stability, while market risk management has a significant positive effect. Operational risk management is marginally negative, and liquidity risk management is positive but insignificant. Audit committee expertise strengthens the effect of operational risk management but weakens the impact of market risk management. No significant moderation is observed for credit or liquidity risks. The study concludes that risk management practices, particularly market and operational risk controls, are critical for bank stability, and the effectiveness of audit committee oversight varies across risk domains. It is recommended that banks enhance transparency in risk disclosures, strengthen operational risk oversight through skilled audit committees, and implement proactive market risk strategies while balancing governance conservatism.