Faculty of Commerce, Law and Management (ETDs)
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Item The relationship between banks’ investing activities and profitability(University of the Witwatersrand, Johannesburg, 2023) Kondile, Kwezi; Godspower-Akpomiemie, EuphemiaThe objective of this study is to examine the relationship between the investing activities of banks and overall bank profitability. This is undertaken across 4 profitability-driven variables: (i) Profit After Tax; (ii) Return on Equity; (iii) Return on Assets; and (iv) Efficiency Ratio (Cost to Income Ratio). The research ascertains the effect on overall profit carried by investing variables which include investments in Property, Plant and Equipment, Intangible Assets and Cash flow from Investing Activities and Investments in Associates. A panel regression model was employed to analyse the relationship between profitability-driven variables and investing activities, incorporating external and internal control variables. . The study analysed a sample of banks from various developing country regions over an eight-to-ten-year period. The study found that the relationship between investing activities and overall profitability was not statistically significant. Furthermore, the study found that Gross Domestic Product (GDP), growth, inflation, and interest rates had a significant impact on profitability, supporting previous literature.Item The impact of risk factors on the commercial banking sector's financial performance in South Africa(2021) Chiyengerere, NanetteBanks face numerous financial and non-financial risks in their operations, and the banking sector plays a positive role in the country's economy. This study aims to find the impact of risk factors on the South African banking sector's financial performance. Fixed effects model was selected estimated together with Panel EGLS (cross-section SUR) to account for cross-sectional heteroscedasticity and correlation. Using annual frequency data from South Africa's systematic important financial institutions (SIFI's) banks, namely, ABSA, FirstRand Bank, Nedbank, Capitec, Investec, and Standard Bank. Return on capital employed (ROCE) and net interest margin (NIM) were bank performance measures. The study results showed that capital adequacy ratio, loan to deposit ratio, liquidity ratio, and unemployment are statistically significant determinants of bank performance measured by ROCE. Whereas GDP, nonperforming loans ratio and capital adequacy ratio are statistically significant to bank performance measured by net interest margin. The study concludes that credit risk, liquidity risk, solvency risk, and market risk factors are fundamental factors in determining South African commercial banks' profitability and financial performance. Therefore, banks have to present an appropriate sense of equilibrium when managing risk or to perform their risk management practices with financial performance. Because poor risk management policies can distress banks' performance badly as they influence asset quality and class, leading to increased advance losses.Item The impact of risk factors on the commercial banking sector's financial performance in South Africa(2021) Chiyengerere, NanetteBanks face numerous financial and non-financial risks in their operations, and the banking sector plays a positive role in the country's economy. This study aims to find the impact of risk factors on the South African banking sector's financial performance. Fixed effects model was selected estimated together with Panel EGLS (cross-section SUR) to account for cross-sectional heteroscedasticity and correlation. Using annual frequency data from South Africa's systematic important financial institutions (SIFI's) banks, namely, ABSA, FirstRand Bank, Nedbank, Capitec, Investec, and Standard Bank. Return on capital employed (ROCE) and net interest margin (NIM) were bank performance measures. The study results showed that capital adequacy ratio, loan to deposit ratio, liquidity ratio, and unemployment are statistically significant determinants of bank performance measured by ROCE. Whereas GDP, nonperforming loans ratio and capital adequacy ratio are statistically significant to bank performance measured by net interest margin. The study concludes that credit risk, liquidity risk, solvency risk, and market risk factors are fundamental factors in determining South African commercial banks' profitability and financial performance. Therefore, banks have to present an appropriate sense of equilibrium when managing risk or to perform their risk management practices with financial performance. Because poor risk management policies can distress banks' performance badly as they influence asset quality and class, leading to increased advance losses