The Influence of Mergers and Acquisitions on Financial Performance and Stock Return of Indonesian Banks (Published)
Business environment has changed rapidly due to dynamic changes in the current global era. Merger and acquisition activities are not a new phenomenon in the business world, and it’s an important business phenomenon. One of the changes that can be seen from the merger and acquisition activities are company’s financial performance and stock return. The purpose of this study is to analyze banks financial performance with financial ratios before and after mergers and acquisitions, analyze the effect of mergers and acquisitions on bank financial performance and analyze the factors that influence the success of mergers and acquisitions. This research used Kolmogorov-Smirnov normality test and Wilcoxon test and logistic regression. The results showed that ROA, OER, NPL, NIM and LDR improved after mergers and acquisitions. Mergers and acquisitions also affect the differences in ROA, OER, NPL, NIM, and LDR before and after mergers and acquisitions. Factors that affect the success of mergers and acquisitions are foreign ownership, acquisition percentage and firm size when viewed the success of merger and acquisition from bank’s ability to increase its net profit. In addition, when viewed from the stock returns obtained factors that affect the success of a merger and acquisition are foreign ownership, the percentage of acquisitions and industry relatedness.
In the recent past, a number of organisations across the world failed irrespective of internal controls. This has raised concerns about the relevance and influence of internal control, especially as it affects the financial performance of an organisation. The main objective of this study was to determine the effect of internal control on financial performance of hospitality organisations (HOs) in Rivers State. The survey research design was adopted for this study. The population of the study was made up of all HOs operating in Rivers State. Convenience sampling technique was adopted in selecting twenty HOs that constitute the sample of this study. Data collection was done primarily using structured questionnaire and secondarily through journals, textbooks and the internet. The questionnaire was validated by senior academic and professional colleagues. The reliability index of the instrument was 0.765 obtained using the Cronbach Alpha technique. Data analysis was carried out using descriptive statistics of percentages, means and standard deviations. Linear regression and correlation analysis were used in testing the hypotheses postulated. The investigation found that internal controls to a significant extent influence financial performance of HOs and that a positive relationship exist between internal control and financial performance of HOs in Rivers State. The study concluded that the control environment affects total revenue as such influences the financial performance of HOs, its non-existence or inadequacy may spell doom for an orgainsation. One of the recommendations made was that management of HOs should regularly upgrade their information and communication framework to enable them cope with the frequent changes in the global environment and as such improve their financial performance.
Corporate Board Size, Risk Management and Financial Performance of Listed Deposit Money Banks in Nigeria (Published)
This study examined the effect of corporate board size, risk management on financial performance of listed deposit money banks in Nigeria for the period of 2011-2016. The population of the study is fifteen (15) listed deposit money banks in Nigeria out of which a sample of fourteen (14) were used for the study due to the accessibility and availability of data. Corporate board size and risk management as the independent variable was proxy with numbers of board of directors, liquidity risk, credit risk and operating risk, while the return on equity(ROE) and earnings per share (EPS) were used to proxy financial performance. Data were collected from secondary source through the annual report and account of the banks for the period under study and the data was analysed using multiple panel regression techniques. The findings reveal that board size, credit risk and operating risk are significant negative effect on return on equity (ROE) and earnings per share (EPS) respectively. The study also shows that liquidity risk is negative and insignificant effect on ROE and EPS of the study banks in Nigeria. It is recommended among others that the banks should regulate their risk management practices and ensure they minimize the non-performing loan as it has been found empirically to reduce the quality of the firm’s financial performance. They should also reduce their operational cost for better performance
The Influence of Financial Support Services on the Financial Performance of Women-Owned Enterprises in Eldoret, Kenya (Published)
Micro-credit services target low income clients who lack access to banking and related services. The study sought to establish the influence of micro-credit services on financial performance of women-owned enterprises in Eldoret. The financial performance measures were the net profit, current, inventory and times interest earned ratio. Based on the research, this paper discusses the influence of financial support services on the financial performance of women-owned enterprises which are funded through micro-credit. The study targeted a population of 1721 which constituted of women who owned enterprises and were registered with the county government of Uasin Gishu County. Study samples were drawn through purposive random sampling. A sample size of 313 was obtained using the Krejcie and Morgan formula. Questionnaires were used to collect data. Descriptive and inferential statistics were used to present and analyse the data obtained. Data was then presented in form of tables, and explanations provided. There results showed that there was no significant influence of financial support services on financial performance of women-owned enterprise (p=0.00). From the study, it was observed that the financial performance of the women-owned enterprises in Eldoret improved due to the increase in the net profit, current, inventory turnover and times interest earned ratio. The study concluded that multiple loan products and favourable loan terms helps boost the financial performance of women owned enterprise. The study recommended that microfinance institutions should restructure the collateral and interest requirements by the women entrepreneurs by using credit scoring and business history as alternatives to asset-based security. This paper underscores the need to carry out more research on factors affecting women-owned enterprise in other areas of similar socio-economic patterns to ascertain whether or not financial support services have had a positive impact on the financial performance of women-owned enterprises. Moreover, a study should be conducted on the influence of micro-finance lending on financial performance of women-owned enterprises in Eldoret town.
The Influence of Capital Adequacy Ratio on the Financial Performance of Second-Tier Commercial Banks in Kenya (Published)
Performance of most mid-tier commercial banks in Kenya has been fluctuating over the past few years. Meanwhile, some of them continue to post impressive results as majority report losses and others merge in order to remain sustainable. This situation points to financial performance affecting the mid-tier commercial banks in Kenya. The government, through the Central Bank of Kenya, introduced prudential regulations aimed at bringing sanity in the banking industry. This move led to closure of Dubai Bank and Imperial Bank while Chase Bank went under statutory management awaiting new investors. From this, an investigation was done on how Central Bank regulations influenced financial performance of second-tier commercial banks in Kenya. Based on the study, this paper explores how capital adequacy ratio influences financial performance of commercial banks in Kenya. The study was purely quantitative research and, therefore, correlation research design and descriptive research designs were used. The study was conducted in 14 second tier commercial banks in Kenya. It collected financial data from 2013 to 2016, considering that the regulations came into effect in 2013 from CBK and commercial banks websites. The data was sourced from Central Bank of Kenya after getting permission and approval from National Commission for Science, Technology and Innovation (NACOSTI). Data collected was analysed using descriptive and inferential statistics. Multiple Regression Analysis was used to test the study research hypothesis. Findings were presented through tabulations and graphical illustrations. Computed correlation showed that capital adequacy ratio had significant strong positive relationship (p<0.05) with financial performance of mid-tier commercial banks. In conclusion, it was found that capital adequacy ratio is among the main predictors of mid-tier commercial banks’ financial performance. It was therefore recommended that CBK needs to regularly monitor commercial banks by ensuring that they publish their quarterly results to the public. The investment regulators in the country such as the Capital Markets Authority (CMA), Kenya Banker Association (KBA) and Central bank of Kenya can use these study findings to understand the bottom line impact of bank regulatory requirements and in understanding banks decision on to its customers.
The Relationship of the Capital Structure and Financial Performance: Empirical Evidence of Listed Banks in Thailand (Published)
This paper aims to determine the relationship between capital structure and banks’ performance in Thailand. We utilize the quarterly data set containing firm-specific characteristics and profitability from 1997 to 2016. By employing the random effect model and robustness check to tackle the endogeneity problem, the result proves that capital structure is significant and negatively correlated with profitability which implies that pecking order theory is valid in data set used. Moreover, credit risk and liquidity risk significantly decrease the financial performance. Based on the result and the theoretical background, this paper would like to suggest that governments and banks should focus on controlling the credit process to reduce the non-performing loans. Moreover, they should pay attention to the fund allocation to avoid the shortage of funding which may be costly to banks. Also, while improving banks’ financial performance, banks’ managers should be aware of over utilizing debt which reduces banks’ profitability.
This paper appraised the effect of intellectual capital on financial performance of firms in Nigeria using the banking industry. The research used the Value Added Intellectual Coefficient (VAIC) to ascertain the extent that intellectual capital indices affect financial performance of three Nigeria. Data were collected from the published annual financial statements of the three banks and analyzed using regression tool. The study indicates that IC has a positive and significant effect on banks’ financial performances of the banks but some are not significant. The results further showed that the banks are statistically different in both the intellectual capital and its financial performance indicators. It also shows that the banks with high IC also show high financial performance. The study recommends banks in Nigeria invest vigorously in development of their human capital as a key driver of firm’s performance. They should also provide the infrastructures needed for to achieve a virile human capital in the system.
Capital Structure Impact on Financial Performance of Sharia and Non-Sharia Complaint Companies of Pakistan Stock Exchange (Published)
For a firm to be profitable, it is necessary to create an optimal capital structure that contribute towards desired performance level. This study was conducted to explore the relationship between capital structure and financial performance of firms specifically with respect to shariah complaint and non shariah complaint companies. The analysis was conducted on panel data of 8 companies (3 shariah complaint and 5 non shariah complaint) listed under technology and communication sector of Pakistan Stock Exchange under the period 2009-2015. Financial Performance was the dependent variable measured by ROA and ROE while capital structure was independent variable measured by indicators, LTDR, STDR, SGR, NDTS and INSHOL. Multiple linear regression and correlation were used as statistical tools to run the model. On the basis key findings we concluded in Pakistan Shariah and non shariah companies have different pattrens of capital structure. We further concluded that capital structure effect the performance of firm in case of non-shariah but do not significantly affect performance of shariah complaint.
Effect of Sustainability Accounting and Reporting on Financial Performance of Firms in Nigeria Brewery Sector (Published)
This paper evaluates the effect of sustainability accounting on the financial performance of listed manufacturing firms in Nigeria. Firms used for the study were chosen from the Nigerian brewery sector. Data were sourced from the financial statements of three sampled firms. Data were analysed using the ordinary linear regression. The study reveals that sustainability reporting has positive and significant effect on financial performance of firms studied. Following the findings, the study recommends that firms in Nigeria should invest reasonable amount of their earnings on sustainability activities while specific accounting templates be articulated by professional accounting regulating bodies to guide firms’ reportage on sustainability activities. The Financial Reporting Council of Nigeria (FRC) and others alike should make sustainability reporting compulsory while adequate sanctions are spelt out and enforced on defaulting organizations to serve as a deterrent
Impact of Working Capital Management on Firm’s Profitability: A Case from Food Sector of Pakistan (Published)
The main aim of this study is to investigate the relationship between working capital management (WCM) and firm’s profitability in the Food sector of Pakistan. WCM plays an important role in firm’s financial management decisions. An optimal (WCM) is expected to contribute positively to the creation of firm’s value and enhancement of its profitability. Return on assets (ROA) is used as dependent variable while different independent variables are also used. Working capital, current asset to total asset ratios’ debt to equity ratio, current ratio and capital size of the firm are used independent variables. These variables are also used to investigate their effect on profitability (net income). A sample size of 5 major food companies in Pakistan has been selected from balance sheet analysis of state bank of Pakistan for a period of five years, from 2012 to 2016. The relationship between (WCM) efficiency and profitability is examined using correlation, regression analyses. The results show a strong positive significant relationship between (WCM) and firm’s profitability in Pakistan’s Food sector.
The purpose of this study is an attempt to explain the test empirically, social performance and environmental performance to financial performance (relevant, accurate, timely and complete) to develop a theoretical framework as the basis for the hypothesis as an answer to the research question, namely, the extent to which mamana: ( 1) the effects of social performance against the financial performance, (2) the effect on the environment performance to financial performance. Corporate social responsibility or Corporate Social Responsibility (CSR) is an idea that makes the company no longer faced with the responsibility that rests on a single bottom line is the value of the company is reflected in its financial condition, but the responsibility of the company should be based on the triple bottom lines which also pay attention to the dimensions of economic, social and environment that will guarantee the value of the company to grow in a sustainable manner.
Effect of Credit Management on Performance of Commercial Banks in Rwanda (A Case Study of Equity Bank Rwanda Ltd) (Published)
Credit management is one of the most important activities in any company and cannot be overlooked by any economic enterprise engaged in credit irrespective of its business nature. Sound credit management is a prerequisite for a financial institution’s stability and continuing profitability, while deteriorating credit quality is the most frequent cause of poor financial performance and condition. As with any financial institution, the biggest risk in bank is lending money and not getting it back. The study sought to determine the effect of credit management on the financial performance of commercial banks in Rwanda. The study adopted a descriptive survey design. The target population of study consisted of 57 employees of Equity bank in credit department. Entire population was used as the sample giving a sample size of size of 57 employees. Purposive sampling technique was used in sampling where the entire population was included in the study. Primary data was collected using questionnaires which were administered to the respondents by the researcher. Descriptive and inferential statistics were used to analyze data. The study found that client appraisal, credit risk control and collection policy had effect on financial performance of Equity bank. The study established that there was strong relationship between financial performance of Equity bank and client appraisal, credit risk control and collection policy. The study established that client appraisal, credit risk control and collection policy significantly influence financial performance of Equity bank. Collection policy was found to have a higher effect on financial performance and that a stringent policy is more effective in debt recovery than a lenient policy. The study recommends that Equity bank should enhance their collection policy by adapting a more stringent policy to a lenient policy for effective debt recovery.
Ethical Marketing Practice: A Foundational and Fundamental Virtue for Corporate Reputation/Financial Performance (Published)
The social and economic justification for the existence and survival of a business corporate entity is its ability to satisfy its customers through its products and services. A company meets its basic responsibility to society through its products and ethical marketing practices. A company cannot successfully sell low quality products, coupled with other sharp and corrupt practices over the long run. The dignity of the marketer must be sustained and maintained. The minimum standard, culture and value system acceptable to the public must be projected. This study is on ethical marketing practice, as a fundamental and foundational virtue for corporate reputation and financial performance. Eight pharmaceutical companies from Edo and Delta States were sampled, using a sample size of 245 staff. The multiple regression statistical technique was used to determine the extent to which standard products and services, honesty and integrity, fair prices and truthful advert predicts financial performance in a business organisation.
The Influence of Foreign Exchange Rate Fluctuations on the Financial Performance of Commercial Banks Listed At the Nairobi Securities Exchange (Published)
A foreign exchange rate is the price at which one currency may be converted into another. An exchange rate is an important aspect in a nation’s international trade, balance of payments and overall economic performance. This paper is based on a study that sought to understand the relationship and effects of foreign exchange liberalization on financial performance of commercial banks listed in Kenya’s Nairobi Securities Exchange. The study used a time series correlation research design with the target population being all commercial banks that are listed in the Nairobi Securities Exchange between 2006 and 2013. Data was sourced from the Central Bank of Kenya and published yearly accounts of listed banks. The study used multivariate Linear Regressions to establish the relationship between foreign exchange rate fluctuations, inflation rates, interest rates and bank performance indicators. Pearson product moment correlation (r) was applied to establish the relationship between the variables. The study found that there existed a strong positive relationship between foreign exchange rates and financial performance indicators. The positive relationship between exchange rate and financial performance may reflect how fluctuating and volatile exchange rate may have contributed to the growth of profitability of banks. The study recommends that the Government should put up more measures to increase the country’s exports.
Factors Influencing the Acceptance of Enterprise Resource Planning System (ERP) and Financial Performance of Saudi Arabia Listed Companies: Multivariate Data Analysis Using Structural Equation Modeling (SEM) (Published)
Purpose – The purpose of this research is to examine the link between the acceptance of enterprise resource planning systems in Saudi Arabia, and the ways in which this can lead to long term acceptance of system. This research examines the issues of ERP acceptance, and the perceived benefits and ease of use, which a user has to deal with. Design/methodology/approach the research suggests the use of quantitative data, through the data analysis using multivariate data analysis. This approach uses structural equation modeling, which can lead to long-term change in the output of the data, and the link between the major hypotheses, which have been suggested. This ensures that the data collection can be undertaken. Findings – A number of findings from this research have been derived. It appears that the acceptance and use of ERP systems is central to the success of information systems today. However, the ease of use needs to be accentuated through training and support of users, which can be facilitated through top-level support for new systems. In order to reduce resistance, organizations need to take a proactive approach in implementing systems, and facilitate user participation, which can ensure that financial performance of systems can be improved.
Factors Affecting ERP Acceptance towards Improved Financial Performance of Saudi Arabia Listed Firms (Published)
The main purpose of this study is to investigate the effects of user training and education and perceived usefulness on the ERP systems acceptance and the contribution of the ERP systems towards the improved financial performance of Saudi firms. The survey is conducted with the ERP users, which are working in the Saudi based companies. The ERP users which are selected for the survey having been using the ERP modules for various tasks including finance and accounting, material management, human resource management, quality management and sales and distribution. The research findings show that training and perceived usefulness both have a positive relation with the acceptance of the ERP systems.
Factors of Change Management and Perceived Ease of Use Affecting ERP Acceptance and Financial Performance of Saudi Arabia Listed Companies (Published)
This study investigates the effects of ERP change management and ERP perceived ease of use on ERP systems acceptance and its impact on the financial performance of Saudi listed companies. The survey method has used in order to collect the primary data and survey was conducted with the employees who are working in the Saudi companies and using the ERP systems in order to manage their day-to-day activities. The findings of this research shows that change management activities within the organization can be helpful in increasing ERP acceptance within the firm. The research findings reflect that effective change management activities can be helpful in increasing the acceptance of the ERP systems within the firm.
Stimulants of Profitability of Non-Bank Financial Institutions: Evidence from Bangladesh (Published)
Financial institutions both Bank and Non-Bank play a significant role in the economy of a country. Like other developing countries Beside the Banking industry necessarily of Non-Bank financial institutions cannot overlook in Bangladesh. This study inspects the profitability of firms in the Non-Banking Financial Institutions (NBFIs) diligence of Bangladesh. Financial Enactment of a financial organization fundamentally depends on its some key financial factors. Specially operating efficiency is main inducing factor which is designed through operating income. Besides it capital Structure combination of equity and liability, term deposit, total asset considerably affect the profitability of any NBFI company. In addition operating expense also upsets the profitability though that is not statistically significant. Different Statistical procedures such as correlation matrix, multiple regressions have been used to determine the associations between variables. And before doing regression analysis normality distribution test has been accomplished by One-Sample Kolmogorov- Smirnov Test. This research is an effort to find out the statistically significant key stimulants variable and their level of impact over net profit.
The Effects of Deposits Mobilization on Financial Performance in Commercial Banks in Rwanda. A Case of Equity Bank Rwanda Limited (Published)
This study is about to establish the effects of deposit mobilization on the bank financial performance in commercial banks in Rwanda. A case study of Equity bank Rwanda limited. Deposits are an indispensable tool commercial banks use to enhance its profitability through advancing deposits mobilized to its customers in form of loans which make in return interest to commercial banks. The lending activity is made possible only if the banks can mobilize enough funds from their customers. Specific objectives of this study are to determine the effect of marketing strategies on the financial performance of commercial banks in Rwanda, to establish the effect of interest rate changes on the financial performance of commercial banks in Rwanda and to determine the effect of banking technology introduced on the financial performance of commercial banks in Rwanda. The target population for the study was the bank managers involved in deposit mobilization namely the marketing team and the branch management team in Equity bank Rwanda. The research used a census to study a population of 27 staff. The main source of data was the primary and secondary data. The documentary method, the questionnaire as research instruments were used to get the data needed for the research. Data were processed by use of descriptive statistics after editing have been done. The computer software SPSS version 20 was used as a device to accommodate analysis. Pearson and Spearman’s correlation analysis was used to test the nature of relationship. The findings indicated that majority of the respondents (85%) confirmed that the brand name of the Equity Bank is recognized in the public this has made able overcoming challenges mostly facing high competition with other banks. The marketing strategy used made the bank to increase in terms of customers and it has led to the increase in deposits over the years. The findings also indicated that a positive change in deposits interest rate affects the level of deposits received and later on the profitability of the bank. The study revealed that the introduction of innovative banking technology has led to the increase in deposits at a low cost as opposed to the usual way of getting deposits through term deposits and made financial services accessible in the unbanked people. This also made the ROA, ROE, net profit increasing due as the loans volume increases. The statistical correlation revealed that there is a positive relationship between deposits mobilization and financial performance of commercial banks in Rwanda, the case of Equity Bank. The study recommends the bank to develop other strategies towards marketing and mobilize more deposits as they are indispensable tools towards the profitability of the bank.
Effect of Corporate Governance on the Financial Performance of Banking Industry in Rwanda: (A Case Study-Commercial Banks in Rwanda) (Published)
This study investigated the effect of corporate governance on Financial Performance of commercial banks in Rwanda. The study has four objectives which determined how board size, CEO duality, institutional ownership, board composition affect financial performance of commercial banks in Rwanda. The study adopted a descriptive research design which assisted to examine the effect of corporate governance on financial performance of commercial banks. The population of the study was 120 composed by the senior managers of the commercials banks operating in Rwanda; and the sample size was 92 but only 76 responded to the questions asked which represent 84%.The key findings for this research were showing that board independence, board composition, institution ownership do not have an effect on financial performance since the majority of respondent have disagreed the effect of corporate governance variables on the financial performance of commercial banks. The analysis of variance has shown that corporate governance variables are not significant predictors to explain the increase of profitability represented by return on asset and return on equity since the p value was 0.447 and 0.186 respectively. This research has concluded that there is no effect between corporate governance using board size, board composition CEO duality as well as institutional ownership are not predictors of financial performance and recommended the regulatory body of commercial banks in Rwanda to provide a guidance on the use of corporate governance practices which may impact positively the financial performance of commercial banks