Determinants of Listed Deposit Money Banks’ Profitability in Nigeria
Issue:
Volume 4, Issue 3, June 2018
Pages:
40-56
Received:
5 May 2018
Accepted:
19 June 2018
Published:
9 July 2018
Abstract: This study examines internal factors affecting profitability of Deposit Money Banks (DMBs) in Nigeria for the period of 2008-2016 using panel data of 14 listed banks drawn from the Nigerian Stock Exchange. Secondary data obtained from the listed Deposit Money Banks' financial statements were analyzed. The independent variables were proxied by Capital Adequacy, Credit Risk, and Inflation while profitability was proxied by Return on Assets (ROA). The study adopts correlational research design to investigate the determinants of profitability of the Deposit Money Banks. Panel data techniques (fixed and random effects model) were employed to examine the effect of internal factors on profitability of the sampled listed Deposit Money Banks. Although Hausman specification test suggested that fixed effect model is more appropriate, the study used Feasible Generalized Least Square (FGLS) to underpin the outcome of the Hausman specification. The study found that internal factors had significantly influenced the deposit money banks' profitability over the study period. The Capital Adequacy had a positive and significant relationship with bank profitability while Credit Risk had a negative and significant relationship with bank profitability during the study period. It is therefore suggested among others that the Central Bank of Nigeria (CBN) should maintain a central database called Credit Risk Management System across banks in the country, which would be generating accurate and reliable credit information on bank borrowers as a way of evaluating the repayment capabilities of the customers to be granted credit facilities.
Abstract: This study examines internal factors affecting profitability of Deposit Money Banks (DMBs) in Nigeria for the period of 2008-2016 using panel data of 14 listed banks drawn from the Nigerian Stock Exchange. Secondary data obtained from the listed Deposit Money Banks' financial statements were analyzed. The independent variables were proxied by Capit...
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Effect of Credit Risk Management Practices on Performance of Commercial Banks in Kenya
Robert Gitau Muigai,
Mary Wanjiru Maina
Issue:
Volume 4, Issue 3, June 2018
Pages:
57-66
Received:
26 June 2018
Accepted:
30 August 2018
Published:
27 September 2018
Abstract: Credit default risk has been cited as the primary cause of bank failures in Kenya. Between 1984 and 1991 there were a total of 29 bank failures reported. This is an alarming rate given that it represents on average two or more bank failures per year during that period. Though this trend has been reversed, credit default risks continue to be a major challenge among banks. The main objective of the study is to establish the effect of credit risk management practices on performance of commercial banks in Kenya. Particularly, the study examined the effect of loan appraisal, lending requirements, credit management tools and loan recovery process on financial performance of commercial banks in Kenya. The study adopted descriptive research design. The target population were all the licensed commercial banks operating in Kenya by the year 2017 as reported in the Bank Supervisory Report 2017. The unit of observation comprised the credit officers and finance managers of the commercial banks. A census was adopted on all the 39 commercial banks hence a total of 78 respondents were targeted. The study used both primary and secondary data. The study findings revealed that loan appraisal, lending requirement, credit management tools and loan recovery process had a positive and significant relationship with the financial performance of commercial banks in Kenya. The study recommended that commercial banks need to establish an overall credit limits at individual borrowers as well as clearly establish a process for approving new and refinancing of existing credits. Further, there is need for follow-up on payment schedule of borrowers and reminding customers before maturity. The commercial banks also need to develop a well-documented lending procedure, do lending against its lending standards, set lending policies in line with the market requirement as well as develop well-established lending policies regarding interest rates
Abstract: Credit default risk has been cited as the primary cause of bank failures in Kenya. Between 1984 and 1991 there were a total of 29 bank failures reported. This is an alarming rate given that it represents on average two or more bank failures per year during that period. Though this trend has been reversed, credit default risks continue to be a major...
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