ABSTRACT

The purpose of this study was to examine banks, on investments and performance appraisal. It was also to ascertain the problems of using financial reports to access performance of banks and finally to determine if there’s a relationship between financial reporting and performance evaluation of a bank.

The inductive research method was adopted and the statistical analysts, particularly the chi-square and t-distribution test were used in the analysis of the data collected from the bank.

Although investors and performance evaluation analyst relied on financial statement in their decisions and appraisal, the reliability of financial report especially during inflation cannot be assured owing to the historical cost convention used as a basis for asset valuation by banks. This is because; the profits of an accounting year would not usually show a true figure owing to the courage effect of inflation. Therefore, managerial decision of banks based entirely on financial reports will lend to poor and inadequate decisions.

The recommendations and suggestion made were based wholly on the outcome of the study, for example, on the problem of inflation, it was recommended that the bank should adopt the current cost accounting basis for its financial reporting ensure credibility and reliability of information, by the various users, given the inflationary relatives.

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