Enterprise Risk Management and Banks’ Financial Performance: Evidence from West African Countries

Dr. Augustine C. Odubuasi, Dr. Felix Enaibre Ighosewe and Dr. Nkechi T. Ofor
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Dr. Augustine C. Odubuasi: Department of Accounting, Hezekiah University, Imo State – Nigeria
Dr. Felix Enaibre Ighosewe: Department of Accounting, Dennis Osadebay University, Asaba, Delta state, Nigeria
Dr. Nkechi T. Ofor: Department of Accounting, Chukwuemeka Odumegwu Ojukwu University, Anambra State, Nigeria

International Journal of Research and Innovation in Social Science, 2022, vol. 6, issue 1, 268-272

Abstract: This paper studied the effect of enterprise risk management (ERM) on bank performance in three selected African countries over a study period of ten years spanning from 2009 to 2018. The study covered selected banks in Ghana, South Africa and Nigeria. The regressor is ERM measured by strategy, operation, reporting & compliance while the regressed is bank performance measured by return on equity. Also, we controlled for firm size and leverage. The data generated were analysed using Stata 13 version, which assisted the use of some analytical techniques.. Panel regressionanalysis was conducted alongside Hausman effect test which indicated the better model that was interpreted between Random Effect (RE) and fixed effect (FE) models. As specified by the Hausman test, the FE model was used for model 1 while the random effect model was used to test model 2. The result revealed that enterprise risk management on the overall has a positive significant effect on bank performance provided it takes into consideration control variables like financial leverage and firm size. Hence, the study concludes that, ERM is instrumental to improved banks’ financial performance (ROE). As such, regulatory authorities should come up with legislation(s) that should enforce and strengthen the enactment of enterprise risk management across banks in the study area.

Date: 2022
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