Return on Assets

Effect of Credit Risk Management on the Financial Performance of Deposit Money Banks in Nigeria (Published)

This study examined the effect of credit risk management on the financial performance of Deposit Money Banks in Nigeria. Specifically, it analyzes the impact of Non-Performing Loans (NPL), Loan Loss Provision (LLP), and Capital Adequacy Ratio (CAR) on Return on Assets (ROA). The study used secondary data from 2014 to 2023 and applied Panel Ordinary Least Squares (OLS) multiple regression for analysis. The findings reveal that NPL has a negative and significant effect on ROA, with a coefficient of -0.031054, a t-statistic of -2.954064, and a p-value of 0.0044. This means that an increase in NPL reduces bank profitability. LLP has a positive and significant effect on ROA, with a coefficient of 0.006245, a t-statistic of 6.092986, and a p-value of 0.0000, showing that higher loan loss provisions improve financial performance. CAR also has a positive and significant effect on ROA, with a coefficient of 0.031904, a t-statistic of 2.189893, and a p-value of 0.0321, indicating that banks with higher capital adequacy perform better. The model explains 44.44% of the variation in ROA, as shown by the R² value of 0.444412. The F-statistic of 12.99828 and its p-value of 0.000000 confirm that the overall model is statistically significant. This study contributes to knowledge by examining these three credit risk factors together, filling gaps in past research. The findings provide valuable insights for bank managers, regulators, and policymakers on how to improve bank stability and profitability through better credit risk management.

Keywords: Capital Adequacy Ratio, Credit Risk Management, Deposit Money Banks, Financial Performance, Loan Loss Provision, Non-Performing Loans, Return on Assets

Impact of CBN Cash Reserves Requirement on the Financial Performance of Deposit Money Banks in Nigeria (Published)

This study investigates the impact of the Central Bank of Nigeria’s (CBN) Cash Reserve Requirement (CRR) on the financial performance of Deposit Money Banks (DMBs) in Nigeria, focusing on Return on Assets (ROA), Return on Equity (ROE), Liquidity Rate (LR), and Loan-to-Deposit Ratio (LDR). Anchored in Monetary Theory and Resource Dependence Theory, the study employs an ex-post facto research design and utilizes secondary data from 2018 to 2023. Descriptive statistics, correlation analysis, and simple regression analysis were applied to examine the relationships between CRR and the performance metrics. Findings reveal that CRR significantly influences all four metrics, demonstrating a strong positive relationship with ROA, ROE, LR, and LDR. These results highlight the dual role of CRR in promoting financial stability and influencing operational strategies in the banking sector. The study concludes that while CRR enhances regulatory compliance and liquidity, it also imposes constraints on lending and profitability, necessitating adaptive strategies by banks. Policymakers are advised to balance CRR adjustments to optimize liquidity control and profitability, ensuring alignment with Nigeria’s economic development goals.

Keywords: Deposit Money Banks, Financial Performance, Loan to Deposit Ratio, Return on Assets, Return on Equity, cash reserve requirement, liquidity rate

Accounts Receivable Management and Financial Performance of Public Universities in Ghana (Published)

This study examines how accounts receivable management affects the financial performance of public universities in Ghana. Utilizing secondary data from 13 public universities over five years (2017–2021), the research employs descriptive statistics, correlation analysis, and regression models to evaluate key financial metrics, including Return on Assets (ROA), Current Ratio (CUR), Accounts Receivable Turnover (ART), and Accounts Receivable Period (ARP). Key findings indicate a moderate positive correlation between ROA and CUR, a strong positive correlation between ROA and ART, and a negative correlation between ARP and ROA, emphasizing the importance of timely collections. Additionally, larger universities tend to have better financial performance, as shown by the positive influence of university size on both ROA and CUR. The study concludes that while some universities manage finances effectively, significant variability highlights the need for improved practices. These insights are valuable for university administrators and policymakers aiming to enhance financial performance in Ghana’s higher education sector.

Keywords: Financial Performance, Liquidity, Return on Assets, accounts receivable management, accounts receivable period, accounts receivable turnover

Influence of Non-Performing Loans, Lending rate and Financial Performance of Commercial Banks in Kenya. A Review of the Literature (Published)

This study examined the impact of non-performing loans on the financial performance of publicly listed commercial banks in Kenya, focusing on the bank lending rate as a mediating variable. It analyzed the relationship between non-performing loans and banks’ return on assets (ROA) and return on equity (ROE) through a review of empirical literature from Google Scholar and the Central Bank of Kenya reports.  Studies show mixed results on the relationship between non-performing loans (NPLs) and bank performance. Previous studies have highlighted an inverse relationship between non-performing loans and return on assets (ROA), as noted by Siddique et al. (2022) and others. On the other hand, Mrindoko et al. (2020) discovered a negligible negative correlation with return on assets. Generally, the literature suggests an inverse relationship between NPLs and bank performance, emphasizing a diversified loan portfolio for improved profitability.  Researchers have noted connections between NPLs and lending rates (Case et al., 2023; Rahmananingtyas, 2022; Koskei & Samoei, 2024), as well as between lending rates and bank performance (Hania & Himel, 2023; Dondi & Mule, 2023). This hypothesis suggests that lending rates play a mediating role in the relationship between non-performing loans (NPLs) and the financial performance of commercial banks in Kenya, highlighting the need for additional empirical research in this area.

Keywords: Financial Performance, Lending Rate, Non-Performing Loans, Return on Assets, Return on Equity

The Effect of Profitability & Market Value on Market Capitalization of the Listed Insurance Companies of Jordan (2010-2023) (Published)

The main objective of this study is to find the effect of profitability & market value on market capitalization of the listed Insurance Companies of Jordan (2010-2023). The research data were collected from secondary sources; the descriptive analytical method was used. The financial statements of the sample banks were analyzed to extract the main ratios used for the study. This study employed a quantitative research design with an explanatory approach. The sample included all publicly listed insurance companies. The descriptive analytical method and correlation analysis were followed to test the effect of independent variables (profitability & market value) on the dependent variables (market capitalization). The results indicated that, market capitalization is most strongly influenced by the Market-to-Book (M/B) ratio, with a significant positive impact. ROA has a weak but positive impact on market capitalization. ROE and P/E ratio do not significantly affect market capitalization in this analysis.

 

Keywords: Market Capitalization, Profitability, Return on Assets, Return on Equity

Corporate Governance Practices and Performance of Deposit Money Banks in Nigeria (Published)

Performance of deposit money banks in Nigeria. The specific objective of the study was to critically appraise the relationship between size of board of directors, composition of board members, frequency of board meetings and return on assets of deposit money banks in Nigeria. The data were sourced through secondary sources from annual reports and accounts of sampled deposit money banks in Nigeria. The stated Null Hypotheses were tested through data analysis by using the correlation analysis as analytical tool. The research findings reveal that board size has a positive and strong relationship with return on assets while board composition has a positive but moderately strong association with return on assets. Furthermore, frequency of board meetings has a negative and very weak relationship with return on assets of deposit money banks in Nigeria. The implication of the findings is that increased board size could result in the improvement of financial performance of deposit money banks. The research found that such increase in number of members of the board will generate the desired outcome if it centers on independent nonexecutive directors with wealth of corporate governance experience, sound and profitable contacts, good and relevant education. The negative relationship with frequency of board meetings implies that banks should begin to trim down on number of board meetings as research has found that frequent meetings signal a crisis or distress situation with perceptions of going concern issues and bank failure. The study recommends that new independent non-executive professionals with critical governance and management attributes could be introduced into the board to improve the quality of decisions, earnings and general performance. Frequency of Board Meetings should be reduced to save cost and time while virtual meetings should be called more often than physical meetings as distance is no longer a barrier.

 

Keywords: Banks’, Board Composition, Board Meetings, Board size, Financial Performance, Nigeria, Return on Assets

Effect of Capital Structure on Financial Performance of Quoted Manufacturing Companies in Nigeria (Published)

Capital structure is a mixture of the financing options a company uses to finance its investments. However, deciding on an optimal capital mix has been a huge task for most manufacturing companies. This paper therefore examined the effect of capital structure on financial performance of quoted manufacturing companies in Nigeria. The study covered ten companies for a period of seven years from 2013 to 2019. Panel data analysis was used to test the hypothesis. The independent variables used are total debt to total asset ratio (TDTAR), long-term debt to total assets (LDTAR), short-term debt to total assets (SDTAR) and total debt to total equity (TDTER) while the dependent variables are return on asset (ROA) and return on equity (ROE). The results of the study showed that SDTAR and LDTAR have positive but insignificant effects on ROA, and TDTAR has a negative significant effect on ROA and ROE respectively. Also, TDTAR and TDTER have negative insignificant effect on ROE. The study concluded that SDTAR, LDTAR, TDTER have no significant effect on ROA and ROE but TDTAR have effect on ROA. This study therefore recommended that firms should be cautious in accumulating debt that could eventually have adverse effects on their value and financial performance.

Keywords: Capital Structure, Return on Assets, Return on Equity, Total Assets, total debts

Impact of Social Costs on Financial Performance of Listed Firms in Nigeria (Published)

To succeed in the business world, organisations need to provide reliable and credible efforts to their stakeholders, to ensure that their business activities would not harm the safety of stakeholders in the area where they are operating. The operation of business conducts in recent time, changes drastically due to the emergence of an increasing number of external factors which impose on corporate performance. Hence, this study examined the impact of social costs on the financial performance of listed firms in Nigeria. The study adopted ex-post facto research designs. Secondary data sourced from the published annual reports of 52 firms, purposively selected for a period of 11 years (2008 to 2018), giving 572 firm-year observations. Data analysed by panel data regression of pooled OLS, random effects, fixed effects models and the Feasible General Least Squares (FGLS) regression for the objectives. Findings revealed that Social Costs (SOCO) had significant and positive effect on ROA (R2 = 0.42, β = 0.202, t(570) = 4.869, p < 0.05). In addition there is evidence that SOCO, firm age, firm size and leverage jointly exerted significant effect on ROA (Adj.R2 = 0.608, F(6, 565) = 5904.01, p < 0.05). The study concluded that social costs have a significant impact on the financial performance of listed firms in Nigeria. It recommended that the practice of elimination of social costs should be intensified by corporate firms to improve on their business reputation.

Keywords: Leverage, Return on Assets, business reputation, firm age, firm size, social costs

Dividend Policy and Profitability of Agro Allied Companies in Nigeria (Published)

This study assesses the effect of dividend policy on the profitability of listed agro-allied companies in Nigeria. The population of the study consists of five (5) listed agro-allied companies on the Nigerian Stock Exchange as at 31/12/2018. All the listed agro-allied firms were used due to the small sample size. Secondary data were collected from the sampled firms through their published audited financial statements for 14 years ranging from 2005-2018. The ex-post facto research design was adopted with regression and descriptive analysis to determine the effect of explanatory variables. The results show that the return on assets has a positive and significant effect on dividend policy of listed agro-allied companies in Nigeria, while return on equity has a negative and significant effect on dividend policy of listed agro-allied companies in Nigeria but earnings per share have a negative and insignificant effect on dividend policy of listed agro-allied companies in Nigeria. Based on the findings, the study concludes that the dividend policy has the probability of influencing the profitability of listed agro-allied companies in Nigeria. The study, therefore, recommends that firms should adopt policy and strategy on efficient use of company assets that would enable them to generate profits to meet up with dividends payment regularly to attract more investors. This is because investors assume that a firm which pays dividend regularly is evidence that a company is healthy financially.

Keywords: Dividend Payout Ratio, Return on Assets, Return on Equity, and dividend retention ratio., earning per share

Effect of Managerial Efficiency on Corporate Financial Performance of Quoted Nigerian Firms (Published)

Managerial skills, performance and firm characteristics are vital in organizations as such, influence the financial performance of firms. Empirical studies have shown that management of firms have difficulties balancing short and long term results leading to corporate insolvency and loss of confidence by investors. This study examined managerial efficiency and corporate financial performance of quoted Nigerian firms. Ex-post facto design was adopted for the study. The population covered 169 quoted firms as at 31^st December 2017. Data were analyzed using descriptive and inferential statistics. Findings revealed that ME has moderate explanatory power on variations in ROA (F(5, 895)=1065.67, Adj. R²=.1913, p˂0.05) but a weaker explanatory power on changes in Total Q (F(5, 895)=37.61, Adj. R²=.1085, p˂0.05). The study recommended that management of firms should strengthen their cost management strategies and apply cost-benefit analysis in their decisions for stakeholders’ economic decisions.

Keywords: Cost of production, Debt equity ratio, Life cycle, Return on Assets, Total quality