scholarly journals Risk Management Practices and Shareholders’ Return Using Evidence from Quoted Commercial Bank in Nigeria

2021 ◽  
Vol 4 (3) ◽  
pp. 116-140
Author(s):  
Henry W.A. ◽  
Justice E.
Keyword(s):  
Risk Management ◽  
Regression Model ◽  
Commercial Banks ◽  
Fixed Effects ◽  
Management Practices ◽  
Return On Assets ◽  
Risk Diversification ◽  
Return On Equity ◽  
Beta Coefficient ◽  
Positive Effect

This study examined the effect of risk management practices on shareholders’ return of quoted commercial banks in Nigeria. Cross sectional data were sourced from financial statements of commercial banks and Central Bank of Nigeria Statistical bulletin from various years. Shareholders return was proxied by return on equity and return on assets while risk management practices were modeled by bank risk diversification, Basel risk compliance, credit monitoring and credit appraisal. Panel data methodology was employed while the fixed effects model was used as an estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit of the regression model. Panel unit root and panel co-integration analysis were conducted on the study. The study found that 60 per cent variations in return on equity of the quoted commercial banks can be traced to variations in risk management practices as formulated in the regression model. The beta coefficient of the risk management practices proved that risk diversification, Basel compliance, credit monitoring and credit appraisal methods as formulated in the regression model have positive effect on return on equity of the commercial banks. In the model II, 47.6 percent variations in return on assets of the quoted commercial banks can be traced to variations in risk management practices as formulated in the regression model. The beta coefficient of the risk management practices proved that risk diversification, Basel compliance, credit monitoring and credit appraisal methods as formulated in the regression model have positive effect on return on equity of the commercial banks. The study concludes that risk management practices have a positive effect on shareholders’ return. The study recommends that commercial banks managements should ensure that all the board members and executive managements amongst other stakeholders are trained to appreciate the functions and responsibilities of credit risk management. The study recommends also that banks should ensure that their credit exposures are adequately secured through proper scrutiny of loan processing in order to identify viable projects so as to reduce loan defaults by bank customers.

scholarly journals Impact of Financial Risk Management Practices on Financial Performance: Evidence from Commercial Banks in Botswana

2019 ◽  
Vol 6 (1) ◽  
pp. 25
Author(s):  
Sathyamoorthi C. R. ◽  
Mogotsinyana Mapharing ◽  
Mphoeng Mphoeng ◽  
Mashoko Dzimiri
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
Interest Rates ◽  
Commercial Banks ◽  
Financial Risk ◽  
Management Practices ◽  
Return On Assets ◽  
Financial Risk Management ◽  
Return On Equity ◽  
Total Debt

The study examined the impact of financial risk management practices on the financial performance of commercial banks in Botswana. The study used Return on Asset and Return on Equity to measure financial performance. Inflation, Interest rates, total debt to total assets, total debt to total equity, total equity to total assets and loan deposit ratios were used as proxies for financial risk management. The research population was all the 10 commercial banks in Botswana and the study covered a period of 8 years from 2011 to 2018. This descriptive study sourced monthly secondary data from Bank of Botswana Financial Statistics database. Descriptive statistics, correlation and regression analyses were applied to analyze the data. The results from regression analysis showed that interest rates had a negative and significant impact on return on assets and on return on equity. On the other hand, total debt to total assets showed a negative and insignificant effect on return on assets. However, total debt to total assets, revealed a positive and insignificant effect on return on equity. The loan deposit ratio indicated a negative and significant impact on return on assets and on return on equity. Findings suggest that banks should strike a proper balance between financial risk management practices and financial performance by engaging in appropriate market, credit, and liquidity risk management practices that will ensure safety for their banks and yield positive profits.

scholarly journals Risk management and profitability of commercial banks of Western Balkans countries of Kosovo, Albania, North Macedonia, and Serbia

2021 ◽  
Vol 8 (1) ◽  
pp. 81-88
Author(s):  
Sevdie Alshiqi ◽  
Arbana Sahiti
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Statistical Significance ◽  
Significant Activity ◽  
Western Balkans ◽  
Credit Risk Management ◽  
Return On Assets ◽  
Positive Dependence ◽  
Return On Equity

Due to their importance, commercial banks currently play a very important role in national financial systems. The profitability of commercial banks depends on how they manage their loans, and credit risk management is thus crucial in the banking system, risk management is significant activity of commercial bank. The main purpose of this study is to observe the extent to which bank profitability is dependent on credit risk management, with a focus on commercial banks in the Western Balkans (Kosovo, Albania, North Macedonia and Serbia). The results reveal a certain assured correlation among credit risk as well as the profitability of banks, where the ratio of non-performing loans (NLPR) has a positive effect on return on equity (ROE) and return on assets (ROA). Capital Insufficiency (CAR) shows that positive dependence is without any statistical significance on return on equity (ROE) and return on assets (ROA).  

scholarly journals Credit Risk Management and Sub-Standard Loans of Commercial Banks in Nigeria: A Panel Data Analysis

2021 ◽  
Vol 2 (3) ◽  
pp. 169-190
Author(s):  
Anele Andrew Nwosi ◽  
Akani Elfreda Nwakaego
Keyword(s):  
Risk Management ◽  
Panel Data ◽  
Credit Risk ◽  
Commercial Banks ◽  
Fixed Effects ◽  
Bank Risk ◽  
Credit Risk Management ◽  
Loan Portfolio ◽  
Risk Diversification ◽  
Risk Transfer

This study examined the effect of credit risk management on sub-standard loan portfolio of quoted commercial banks in Nigeria. Cross sectional data was sourced from financial statement of commercial banks and Central Bank of Nigeria Statistical bulletin from 2009-2018. Sub-standard portfolio was used as dependent variable while bank risk diversification, Basel risk compliance, risk transfer were used as independent variables. Panel data methodology was employed while the fixed effects model was used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. Panel unit roots and panel cointegration analysis were conducted on the study.   The empirical results proved that 41.7 per cent variations in the sub-sub-standard loans’ portfolio   was explained by credit risk management. From the random effect results, bank risk transfer and Basel compliance have positive relationship with sub-standard loan portfolio while risk bank risk diversification have negative relationship with sub-stand ad loan portfolio of the commercial banks.  We recommend that management of the commercial banks should be pro-active and devise effective measures of managing credit risk to reduce the incidence of sub-standard loans.  The monetary authority should monitor the Basel compliance rate and policies of the commercial banks to credit risk management

Assecs the Efficiency of Operational Risk Management in Russian Banks

2020 ◽  
Vol 17 (2) ◽  
pp. 102-119
Author(s):  
Jalal H. Abu-Alrop
Keyword(s):  
Risk Management ◽  
Data Envelopment Analysis ◽  
Commercial Banks ◽  
Operational Risk ◽  
Data Envelopment ◽  
Return On Assets ◽  
Return On Equity ◽  
Operational Risk Management ◽  
Net Interest Margin ◽  
Indicator Approach

This study examines the efficiency of operational risk management of 85 Russian commercial banks during the period 2008—2017. This study uses data envelopment analysis (DEA) with financial ratios to assess the efficiency of operational risk management. The study adopts the basic indicator approach (BIA) to measuring operational risk. Also, the study adopts net interest margin (NIM), return on assets (ROA), and return on equity (ROE) for measuring banks performance. The study found that the small banks were the most effective in managing operational risk, while large banks were more efficient than medium banks.

scholarly journals The Effect of Size on Financial Performance of Commercial Banks in Kenya

2018 ◽  
Vol 14 (7) ◽  
pp. 373
Author(s):  
Mirie Mwangi
Keyword(s):  
Mergers And Acquisitions ◽  
Financial Performance ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Fund Raising ◽  
Growth Strategies ◽  
Return On Assets ◽  
Return On Equity ◽  
Policy Initiatives ◽  
Positive Effect

The question of whether size influences financial performance of commercial banks has not been conclusively settled empirically. The objective of the study was therefore to establish the effect size has on the profitability of commercial banks in Kenya. The study used an unbalanced panel of all commercial banks in Kenya for the ten year period 2007 to 2016 (the number ranged from 39 to 43). Regression analysis was used to relate size (proxied by log of total assets) against financial performance (Return on assets and return on equity). Size was found to have a positive effect on financial performance of commercial banks in Kenya. In addition, the effect was stronger the larger the commercial bank. The study recommends that policy initiatives geared towards increasing the size of the commercial banks be considered and shareholders/managers could also adopt growth strategies (internally generated, fund raising or mergers and acquisitions).

scholarly journals Risk management practices and company performance: an empirical evidence from cement sector of Pakistan

2016 ◽  
Vol 13 (2) ◽  
pp. 438-442
Author(s):  
Syed Atif Ali ◽  
HJ Mohd Rasid Hussin
Keyword(s):  
Risk Management ◽  
Management Practices ◽  
Company Performance ◽  
Working Capital ◽  
Return On Assets ◽  
Return On Equity ◽  
Independent Variables ◽  
Multiple Regression Technique ◽  
Operating Leverage ◽  
The Impact

The study investigates the impact of risk management on the company performance. Degree of financial leverage (DFL), degree of operating leverage (DOL) and the working capital ratio (WCR) are taken as independent variables which are the representative of risk and the earning price per share (EPS), return on assets (ROA), return on equity (ROE), Sales and Net profits are taken as the representative of performance. Last 10 years (2004-2013) of Cement sector of Pakistan data is chosen as sample for analyze their relations by multiple regression technique. Results reveal that WCR impact adequately on the company performance because if company has enough liquidity than it perform its operations smoothly and enhance its performance very well. DFL should be control moderately because enough DFL leads performance of company downward. On the other hand, the DOL should be less because it causes the less profitability for the company from its operations.

The performance of Islamic banking among the commercial banks in Malaysia

2008 ◽  
Vol 5 (1) ◽  
pp. 59
Author(s):  
Samsuwatd Zuha Mohd Abbas ◽  
Norli Ali ◽  
Aminah Mohd Abbas
Keyword(s):  
Commercial Banks ◽  
Positive Impact ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
Accounting Performance ◽  
Significant Difference ◽  
The Mean

This paper examines the accounting performance of the Islamic banking among (??) commercial banks in Malaysia. A total of 18 commercial banks which include 4 Islamic banks are selected as samples covering the period of 2000 - 2006. Accounting performance is measured by the return on assets (ROA) and return on equity (ROE). The objective of the study is (1) to determine whether Islamic banking performance is at par with the conventional banking and (2) to investigate whether the type (Islamic or conventional bank) and age of bank influence the performance. Result of the independence t-test of the study shows that there is no significant difference in the performance of the Islamic and the conventional banking in Malaysia although the mean score for conventional banking is higher. The regression results show that the age of banks has a positive impact on the bank performance where as none of the types of banks influence performance.

Analisis Pengaruh Islamicity Performance Index Terhadap Profitabilitas Bank Umum Syariah di Indonesia Tahun 2014-2018

2021 ◽  
Vol 12 (1) ◽  
pp. 27-37
Author(s):  
Siva Nabilla ◽  
Rizal Pahlevi
Keyword(s):  
Performance Index ◽  
Commercial Banks ◽  
Sampling Method ◽  
Joint Effect ◽  
Profit Sharing ◽  
Performance Ratio ◽  
Analysis Method ◽  
Return On Assets ◽  
Income Ratio ◽  
Positive Effect

This study aims to determine the effect of the Islamicity Performance Index on the Profitabilityof Islamic Commercial Banks in Indonesia in 2014-2018. Research variables consist of Return OnAsset (ROA), Profit Sharing Ratio (PSR), Zakat Performance Ratio (ZPR), and Islamic Income Ratiovs Non-Islamic Income Ratio (IsIR). The population of this research is all Islamic commercial banksin Indonesia. This research uses the purposive sampling method. The sample used in this study were9 Islamic Commercial Banks that meet the required criteria. The analysis method used is multipleregression. The results of this study indicate that according to the T-test (partially) the results are thePSR variable has a positive effect, the ZPR variable has a positive effect and the IsIR variable hasno and insignificant effect on the Return On Asset (ROA) of Islamic Commercial Banks. So it can beconcluded from the three variables tested, the PSR variable and the ZPR variable are variables thathave a positive effect in this study. Meanwhile, according to the F test (simultaneously), the results arethe variable Profit Sharing Ratio (PSR), Zakat Performance Ratio (ZPR), and Islamic Income Ratio vsNon-Islamic Income Ratio (IsIR) have a joint effect on Return On Assets (ROA). ) Sharia CommercialBank.

An Investigation of Credit Risk Management Strategies of Private Commercial Banks of Bangladesh

2014 ◽  
Vol 2 (2) ◽  
pp. 77-87
Author(s):  
Abu Hanifa Md. Noman ◽  
Md. Amzad Hossain ◽  
Sajeda Pervin
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Management Practices ◽  
Management Practice ◽  
Management Strategies ◽  
Third Party ◽  
Primary Data ◽  
Credit Risk Management ◽  
Risk Management Strategies

Objective - The study aims to investigate credit risk management practices and credit risk management strategies of the local private commercial banks in Bangladesh. Methodology -The investigation is conducted based on primary data collected from a set of both closed end and open end questionnaire from 23 out of 39 local private commercial banks in Bangladesh. Descriptive statistics has been used in processing the data and interpreting the results. Findings - The results reveal that credit risk management practice of the sample banks is sound which is attributed to the appropriate implementation of Basel II and credit risk management guidelines the country's central bank. The findings further show that use of Credit risk grading is most popular and effective criteria for measuring the borrowing capacity of the borrowers. In order to control credit risk and preventing losses from credit exposure banks give more focus on collateralization, accurate loan pricing and third party guarantee. Loan is monitored properly and credit reminder is given to the client if principal and interest remain outstanding for three months. The study further reveals that lack of experienced and trained credit officers, lack of genuine market information and Lack of awareness regarding non-genuine borrower are the most important problems of current credit risk management practices in Bangladesh. Novelty - To the best of the knowledge of the authors the study is the first that investigates credit risk management strategies of private commercial banks, especially on Bangladesh. Type of Paper - Empirical Keyword : Bangladesh; Commercial Bank; Credit risk; Credit risk management; Credit risk management strategies.

scholarly journals Bank-specific, Industry-specific and Macroeconomic Determinants of Banks Profitability: Empirical Evidence from Tanzania

2016 ◽  
Vol 3 (2) ◽  
pp. 100 ◽  
Author(s):  
Saganga Mussa Kapaya ◽  
Gwahula Raphael
Keyword(s):  
Regression Model ◽  
Fixed Effects ◽  
Capital Adequacy ◽  
Market Development ◽  
Return On Equity ◽  
Net Interest Margin ◽  
Financial Market Development ◽  
Fixed Effects Regression ◽  
Macroeconomic Determinants ◽  
Loan Losses

The study analyzed effects of bank-specific, industry-specific and macroeconomic determinants on banks profitability. It used a maximum of 350 firm-years, from 52 banks from 1998 to 2010 in Tanzania. It did proxy profitability using return on asset (ROA), return on equity (ROE) and net interest margin (NIM). The static fixed effects regression model indicated that; credit facilities (CFA), capital adequacy (TEA), credit risk (CFR), diversification ratio (DIV), bank risk (BAR) and financial market development (MCAd) were significantly influencing ROA. The dynamic fixed effects regression model indicated that lagged ROA, TEA, loan losses provisions (PLT) and BAR, were significantly influencing ROA.

Sign in / Sign up

Export Citation Format

Share Document