ABSTRACT

This study examined Financial Derivatives and Financial Performance of listed Commercial Banks in Nigeria. A period of seven (7) years (2013 to 2019) was covered and ex-post facto research design was adopted. The study employed all fourteen (14) listed commercial banks in Nigeria as at 31^st December, 2019.  Return on Assets (ROA), Return on Equity (ROE), Earnings per Share (EPS) and Return on Capital Employed (ROCE) were used as measures of performance while Financial Derivative Assets (FDA), Financial Derivative Liabilities (FDL), Financial Derivative Trading Income (FDTI) and Financial Derivative Disclosure (FDD) were measures of financial derivatives as well as firm age, firm growth and leverage as controls for the regression model. However, to test the hypotheses of the study, multiple regression analyses technique was employed using E-view, version 11. Results revealed that FDA and FDTI has a positive significant (5%) effect on Earnings per share, FDL and FDD has a negative significant effect on return on assets while FDA, FDL, FDTI and FDD have no significant effect on return on equity and return on capital employed. The study concludes that FDL and FDD have a significant effect on return on assets of listed commercial banks in Nigeria while FDA and FDTI have a significant effect on earnings per share of listed commercial banks in Nigeria. The study therefore recommends that corporate managers especially those within the banking sector should engage or drive policies that will promote the use of derivatives. This will engender the banks holdings of derivative assets and derivative trading income to increase their earnings that will in the long run enhance the performance of Commercial Banks in Nigeria.  Financial Regulators should organize conferences and symposia for commercial banks in order to enhance their knowledge base on the effective use of financial market derivatives.