Evaluating profitability strategies and the determinants of the risk performance of sectoral and banking institutions
Journal of Economic and Administrative Sciences
ISSN: 1026-4116
Article publication date: 9 October 2018
Issue publication date: 9 October 2018
Abstract
Purpose
The purpose of this paper is to evaluate the need to incorporate the loan loss provisions (LLPs) and risk measures in order to examine the repercussions on advancing approach and profitability.
Design/methodology/approach
The study investigates the effect of explanatory variables on profitability and advancing approach of the banks. The variables used in this study were determined, based on the review of relevant literature and established according to the availability of data for measurement purposes. Inspired by previous research, Hausman test is used in this study to determine whether a random or fixed effects generalized least squares model is best. The linear regression model is applied to strongly balanced panel data obtained from the ten commercial banks.
Findings
The findings demonstrate that Nigerian banking sector considers LLPs in terms of its decision making of advancing approach, while proper inclusion of credit, market and operational risk is more important for South Africa’s banks rather than the maintenance of provisions.
Originality/value
Moreover, the credit risk proves to be more needed factor of consideration for Nigerian rather for South African banks. This is an answer to the strong economy of South Africa as compared to Nigeria and more chances of default faced by Nigerian banks.
Keywords
Acknowledgements
The authors thank Expertactions ExiGblobal Capital Group for funding this research.
Compliance with ethical standards: the authors declare that they have no conflict of interest.
The authors of this paper have not made their research data set openly available. Any enquiries regarding the data set can be directed to the corresponding author. Expression of Concern: The publisher of the Journal of Economic and Administrative Sciences is issuing an Expression of Concern for the following article by Walter Amedzro St-Hilaire and Patrick Boisselier (2018) ‘Evaluating profitability strategies and the determinants of the risk performance of sectoral and banking institutions’ published in the Journal of Economic and Administrative Sciences, Vol. 34, No. 3, pp. 174-186. https://doi.org/10.1108/JEAS-08-2017-0078, to inform readers that concerns have been raised regarding the authorship of this paper. An investigation is ongoing and is currently unresolved. Despite numerous attempts to contact the authors, the journal has yet to receive sufficient information. The second author, Patrick Boisselier, would like it to be noted that they are not in agreement with this Expression of Concern. Further information will be provided by the Journal of Economic and Administrative Sciences as it becomes available.
Citation
St-Hilaire, W.A. and Boisselier, P. (2018), "Evaluating profitability strategies and the determinants of the risk performance of sectoral and banking institutions", Journal of Economic and Administrative Sciences, Vol. 34 No. 3, pp. 174-186. https://doi.org/10.1108/JEAS-08-2017-0078
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited