This study investigates the effect of green bond financing on the asset quality of Nigerian deposit money banks (DMBs) within the framework of strategic financial intermediation. The growing global emphasis on sustainable finance has positioned green bonds as a critical instrument for mobilizing capital toward environmentally responsible investments while potentially influencing banks’ risk profiles. Adopting an expost facto research design, the study utilizes panel data from listed Nigerian DMBs over the period 2015– 2024. Green bond financing is proxied by green asset ratio, green bond investment volume, and sustainability-linked lending exposure, while asset quality is measured using non-performing loan ratio (NPL), loan loss provision ratio (LLP), and cost of risk (COR). Panel regression techniques, including fixed-effects estimation, are employed following diagnostic tests. Empirical findings reveal that green bond financing significantly improves asset quality by reducing non-performing loans and credit risk exposure. Specifically, increased allocation to green assets is associated with lower NPL ratios, while sustainabilitylinked lending enhances risk diversification and loan performance. The study concludes that green bond financing serves as a strategic intermediation mechanism that strengthens bank stability and resilience. It recommends that Nigerian banks deepen participation in green finance markets and align lending strategies with environmental sustainability frameworks to enhance asset quality and long-term financial performance.

Ndaman Abdullahi, JULIET NGOZI EDE,"Green Bond Financing and the Asset Quality of Nigerian Deposit Money Banks: A Strategic Intermediation Analysis" International Journal of Advanced Multidisciplinary Research and Educational Development, V2(5): Page(585-595) September - October 2026. ISSN: 3107-6513. www.ijamred.com. Published by Scientific and Academic Research Publishing.