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Keywords = risk adjusted return on assets (RAROA)

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19 pages, 279 KiB  
Article
Corporate Governance Mechanism and Bank Performance, New Insights from Emerging Economy: Evidence from Nigeria Banking Sector
by Olusola Enitan Olowofela, Hermann Azemtsa Donfack and Celestin Wafo Soh
J. Risk Financial Manag. 2025, 18(2), 92; https://doi.org/10.3390/jrfm18020092 - 8 Feb 2025
Viewed by 1883
Abstract
We investigated the relationship between corporate governance mechanisms and bank performance in the Nigerian banking sector. We focused on data from 2012 to 2022 extracted from the balance sheets of deposit money banks in Nigeria. We employed the Generalized Method of Moments (GMM) [...] Read more.
We investigated the relationship between corporate governance mechanisms and bank performance in the Nigerian banking sector. We focused on data from 2012 to 2022 extracted from the balance sheets of deposit money banks in Nigeria. We employed the Generalized Method of Moments (GMM) with Stata 13 and Python library to analyze the data. The research underscores the positive influence of non-executive directors and effective credit risk management on risk-adjusted return on assets in the Nigerian banking sector. Conversely, larger board sizes and higher levels of independence negatively impact performance. Notably, corporate governance variables do not significantly determine risk-adjusted return on equity, except for a negative association with lending rates. Practical implications include advocating for non-executive directors, optimizing board size and prioritizing robust credit risk management for enhanced financial outcomes. This research contributes to understanding the crucial role of corporate governance in the Nigerian banking sector, emphasizing its significance for prudent risk management and stakeholder confidence. Full article
(This article belongs to the Section Business and Entrepreneurship)
20 pages, 443 KiB  
Article
Profitability Drivers in European Banks: Analyzing Internal and External Factors in the Post-2009 Financial Landscape
by Suzana Laporšek, Barbara Švagan, Mojca Stubelj and Igor Stubelj
Risks 2025, 13(1), 2; https://doi.org/10.3390/risks13010002 - 28 Dec 2024
Cited by 1 | Viewed by 1969
Abstract
The paper examines the key determinants of European banks’ profitability by analyzing the return on assets (ROA), return on equity (ROE), net interest margin (NIM), and the risk-adjusted measures of profitability, RAROAA and RAROAE, across 34 European countries during the period from 2013 [...] Read more.
The paper examines the key determinants of European banks’ profitability by analyzing the return on assets (ROA), return on equity (ROE), net interest margin (NIM), and the risk-adjusted measures of profitability, RAROAA and RAROAE, across 34 European countries during the period from 2013 to 2018—a time characterized by economic recovery and significant regulatory reforms, including the implementation of Basel III standards. Using the Generalized Method of Moments (GMM) approach and data of 3076 European banks, the research addresses the complex interplay between internal (bank-specific) factors and external factors, including macroeconomic and industry-specific factors. The results show that profitability is positively associated with a higher capital adequacy, liquidity risk, and income diversification, but not for risk-adjusted profitability ratios. Credit risk, management efficiency, and excessive size have a negative effect on all studied profitability measures. Macroeconomic conditions, in particular, GDP growth and inflation, also have a significant impact on profitability. The findings offer valuable insights for policymakers, regulators, and financial institutions aiming to enhance profitability while maintaining the stability of the European banking sector. Full article
(This article belongs to the Special Issue Portfolio Theory, Financial Risk Analysis and Applications)
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