Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Portfolio Strategies and Performance of Quoted Commercial Banks in Nigeria

TORUTEIN Isiya Oki PhD, Charles Ibebi PhD

Abstract

This study examined the relationship between portfolio Strategies and performance of quoted commercial banks in Nigeria. The purpose of the study was to ascertain the direction that portfolio management affects the performance of quoted commercial banks in Nigeria. Secondary data obtained from 13 quoted commercial banks from 2012 - 2021 obtained from the Nigerian Stock Exchange Fact book and annual reports of the quoted commercial banks. The variables considered were return on equity as dependent variable while the independent variables were proxy by credit portfolio, investment portfolio, financial portfolio and assets portfolio. Panel data methodology was employed while the fixed effects model was used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. The study found that 71.6 per cent variation on return on equity of the quoted commercial banks can be traced to portfolio management practices of the commercial banks; this implies that 28.4 per cent can be traced to factors not captured in the model. The study further found that the f- statistics and probability confirms that the model is significant and can predict the variation on the dependent variable. The estimated model proved that Durbin Watson statistics proved that there is presence of serial autocorrelation among the variables while the beta coefficient of the variables indicates that independent variables have positive relationship with return on equity of the quoted commercial banks. From the findings, the study concludes that there is significant relationship between credit portfolio and return on equity of commercial banks in Nigeria. The study concludes that there is significant relationship between investment portfolio and return on equity of commercial banks in Nigeria. From the findings, the study concludes that there is significa

Keywords

Portfolio StrategiesPerformanceCommercial BanksNigeria

References

Abdullah, M., Shahimi, S., & Ismail, A.G. (2011). Operational risk in Islamic banks: examination of issues. Qualitative Research in Financial Market, 3(2), 131-151. Abdullahi, I. B. (2007). Banking Sector Reforms and Bank Consolidation in Nigeria: Challenges and Prospects. Business Journal of Management and Social Sciences 6(1), 116-125. Abiola, I., & Olausi, S (2014). The impact of credit risk management on the commercial banks performance in Nigeria, International Journal of Management and Sustainability, Conscientia Beam, 3(5), 295-306. Acemoglu, D., Ozdaglar, A., & Tahbaz-Salehi, A. (2015). Systemic risk and stability in financial networks. American Economic Review, 105(2), 564-608. Adebayo, A. O., & Oluwaremi, F. (2017). Relationship between credit risk management and the performance of money deposit banks in Nigeria. IOSR Journal of Economics and Finance (IOSR-JEF), 8(2), 38 - 48. Adebisi, O. S., Adeusi, S. O., Akeke, N. I., & Oladunjoye, O. (2013). Risk management and financial performance of banks in Nigeria. Journal of Business and Management. 14(6), 113 - 126. Adegbie, F. F., & Dada, O. T. (2018). Risk assets management, liquidity management and sustainable performance in Nigeria deposit money banks. International Journal of Accounting Research, 6(2), 1 – 10. Adegbie, F. F., & Otitolaiye, E. D. (2020). Credit risk and financial performance: an empirical study of deposit money banks in Nigeria. European Journal of Accounting, Auditing and Finance Research, 8(2), 38-58. Adekunle, O., Agbatogun, T., Alalade, S. Y., & Cole, A. (2015). Credit risk management and financial performance of selected commercial banks in Nigeria. Journal of Economic & Financial Studies, 03(01), 1- 9. Adidu, F. A., Akintoye, I. R., & Owojori, A. A. (2011). The challenge of risk management in Nigerian banks in the post consolidation era. Journal of Accounting and Taxation, 3(2), 21-23. Afonso, A., & Jalles, J. T. (2015). Fiscal sustainability: a panel assessment for advanced economies. Appl Econ Lett. 22(11), 925–929. Ahmad, A. (2018). Does profitability of Jordanian commercial banks get affected by risk? Management practices? European Journal of Scientific Research, 148(3), 319-332. Ahmad, N.H., & Ariff, M. (2007). Multi-country study of bank credit risk determinants. International Journal of Banking and Finance, 5(1), 135-152. Akinselure, O. P., & Akinola, T. A. (2019). Impact of credit risk management on profitability of selected deposit money banks in Nigeria. International Journal of Economics, Commerce and Management United Kingdom, 7(9), 78-98. Akinselure, O., & Akinola, A. (2019).Impact of credit management on financial performance of Deposit money banks in Nigeria, International Journal of Economics, Commerce and Management, 7(9), 254-269. Ali, C., Bojan, G., & Roger, A. (2018). Determinants of financial performance of banks in Central and Eastern Europe. BEH - Business and Economic Horizons, 14(3), 513-529. Ali, S.A. (2015). The effect of credit risk management on financial performance of the Jordanian commercial banks. Investment Management and Financial Innovations, 12(1-2), 335-345. Alshatti, A.S. (2015). The effect of credit risk management on firm value of Jordanian commercial banks. Investment Management and Financial Innovations, 12(1-2), 338- Al-Tamimi, H., Hussein, A., Miniaoui, H., & Elkelish, W.W. (2015). Financial risk and Islamic banks’ performance in the Gulf Cooperation Council Countries. International Journal of Business and Finance Research, 9(5), 103-112. Anetoh, V. C., Nwadialor, E. O., Anetoh, J. C., & Okeke, G. N. (2021). Effect of credit and operational risk management on firm value of deposit money banks in Nigeria. African Journal of Accounting and Financial Research, 4(1), 14-32). Annor, E.S. & Obeng, F.S. (2017) Impact of credit risk management on profitability of selected commercial banks listed on the Ghana stock exchange. Journal of Economics, Management and Trade, 20(2), 1-10. Aruwa, S.A & Naburgi, M.M. (2014). Impact of capital adequacy on the financial performance of quoted deposit money banks in Nigeria. International Journal of Commerce and Management, 5(2), 186-201. Azam, A. (2018). Measuring credit risk management and its impact on bank performance in Iran. Marketing and Branding Research, 5, 168 – 183. Belás, J., Gavurová, B., Mišanková, M., & Schönfeld, J. (2017). Credit risk management: financial safety and sustainability aspects, Journal of Security and Sustainability Issues 7(1), 79–93. Belayet, H., Muhammad, M., Qingfeng, C., & Syeda, S. P. (2020). Capital structure, financialperformance, and sustainability of micro-finance institutions (MFIs) in Bangladesh. Sustainability (MDPI), 12, 6222, 1 – 18. Bhattarai, Y.R. (2016). The effect of credit risk on the performance of Nepalese commercial banks. NRB Economic Review, 28(1), 41-62. Bishnu, P. (2019). Effect of credit risk on the financial performance of commercial banks in Nepal. European Journal of Accounting, Auditing and Finance Research, 7(5), 87-103. Boyd, John H., & Runkle, David E. (1993). Size and performance of banking firms: testing the predictions of theory. Journal of Monetary Economics, Elsevier, 31(1), 47-67. Chapelle, A. & Crama, Y. (2008). Practical methods for measuring and management of liquidity and funding risk management, International Journal of Business and Research, 3(3), 99-123. Charles O., Maryanne M., & Willy M. (2015). The effects of deposit to asset ratio on the financial sustainability of deposit taking micro finance institutions in Kenya. International Journal of Economics, Commerce and Management United Kingdom. III (8), 67-88. Chukwunulu, J., Ezeabasili, N., & Igbodika, M. (2018). Risk management and the performance of commercial banks in Nigeria. IIARD International Journal of Banking and Finance Research, 5(1), 231-247. Claessens, S., & Van Horen, N. (2015). The impact of the global financial crisis on banking globalization. IMF Economic Review, 63(4), 868-918. Ebrahim, A., Khalil, A., Kargbo, M., & Xiangpei, H. (2016). A study of credit risk and commercial bank performance in Yemen: Panel evidence. Journal of Management policies and Practices, 4(1)57-69. Ejoh, N.O., Okpa, I. B., & Egbe, A. A. (2014). The impact of credit and liquidity risk management on the profitability of deposit money banks in Nigeria. International Journal of Economics, Commerce and Management, 2(9)1-15. Emeka N., & Nenubari Ikue-John (2019). Dynamics of capital adequacy and profitability of internationalized deposit money banks in Nigeria. Bussecon Review of Finance & Banking. BRFB, 1(1), 2687 - 2501. Emily, B. N., Irom, I. M. Olalekan, L. I., & Mustapha, L. O. (2018). Corporate board size, risk management and financial performance of listed deposit money banks in Nigeria. European Journal of Accounting, Auditing and Finance Research, 6(1), 1-20. Gadzo, S.G., Kportorgbi, H.K., & Gatsi, J.G. (2019). Credit risk and operational risk on financial performance of universal banks in Ghana: A partial least squared structural equation model (PLS-SEM) approach. Cogent Economics and Finance, 7(1), 1-16. Gadzo, S.G., Kportorgbi, H.K., & Gatsi, J.G. (2019). Credit risk and operational risk on financial performance of universal banks in Ghana: A partial least squared structural equation model (PLS-SEM) approach. Cogent Economics and Finance, 7(1), 1-16. Gadzo,S.G, Oduro,R., & Asiedu, M.A. (2019). Credit risk on corporate financial performance: Evidence from listed banks on the Ghana stock exchange. Journal of Economics and International Finance, 5(3), 12-34. George, O., Frimpong S., Jonas, B., Osman, B., & Peter, K. (2015). Credit Risk Management and Its Impact on Financial Performance of Listed Banks in Ghana, Internationa

More Articles from IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH

Effect of Monetary Policy on Profitability of Deposit Money Banks in Nigeria

Author: Stephanie Nguhemen Gbande, Mike T. Soomiyol, Timothy Tyona, Gaius Msendoo Asombo

Cognitive Diversity and Performance of Deposit Money Banks in Nigeria

Author: 1Nwangwu, Okwudiri Iheanyi, 2 Pepple, Grace Jamie PhD

Banking Innovations and Industrial Sector Performance in Nigeria: Evidence from ARDL Model

Author: Peter Ngbede Ajam, Abiodun Edward Adelegan, Benson Emmanuel

Environmental Sustainability and Entrepreneurial Performance in Nigeria: A Case Study of Enugu State

Author: i, Azolike Nkiru Nkechi, ii, Okwor Emmanuel Ejimnkonye, iii, Eneaniofu Daniel Mmaduakonam