The effect of asset liability management strategies and regulation on performance of commercial banks in Lesotho

Abstract

This study assesses the effect of Asset Liability Management Strategies on Performance of Commercial Banks. That is, those factors that are responsible for differences between returns generated on assets and costs incurred on liabilities by banks in Lesotho. The study also investigates the impact of bank regulation on banks performance. The study results suggest that only one regulatory variable namely Capital adequacy ratio has a strong influence on the profitability of commercial banks in Lesotho. The other regulatory variable namely Liquidity ratio has a negative but statistically insignificant impact on banks’ performance while AML variable, Gap ratio, has positive but also statistically insignificant impact on banks performance. Furthermore, the control variables have positive, insignificant impact on banks performance.