Risk management and profitability of commercial banks: a case study of salam bank in mogadishu, somalia
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Date
2018-11
Authors
Journal Title
Journal ISSN
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Publisher
Kampala International University. College of Economics and Management
Abstract
The study sought to assess the effect of risk management on profitability of
commercial banks in Mogadishu-Somalia. It was guided by three specific objectives,
that included i) determining the effect of risk identification on profitability of
commercial banks in Mogadishu Somalia; ii) examining the effect of risk assessment
on profitability of commercial banks in Mogadishu Somalia and (iii) to establish the
effect of risk monitoring and control on profitability of commercial banks in
Mogadishu Somalia. This research employed a descriptive research design to
describe the variables, the questionnaire and interview guide were used as the
research instruments. Descriptive statistics were used in this study included
frequencies, means and regression analysis on variables. The findings revealed the
following: The findings indicated that risk identification significantly affects the
profitability of commercial banks in Mogadishu Somalia (sig=O.000 and F-value=
84.756), the findings revealed that there is a significant effect risk assessment has
on profitability of commercial banks in Mogadishu Somalia (sig=O.000 and F-value=
71.395), findings of this study proved a positive significant effect risk monitoring and
control has on profitability of commercial banks in Mogadishu Somalia (sig=0,000
and F-value=93.669). Still the researcher concluded that; risk identification has a
considerably high influence on the profitability of the commercial banks, hence there
is need for improving the risk identification is to enhance profitability, risk
assessment has a significant effect on profitability of commercial banks in Mogadishu
Somalia and this indicates that risk assessment has a high bearing on profitability of
the commercial banks, and finally risk monitoring and control has a positive
significant effect on profitability of commercial banks in Mogadishu Somalia and
hence indicating that risk monitoring and control has a bearing on the profitability
hence there is a need for enhancing monitoring given the state of the profits though
other factors complemented in the study. The researcher recommended that: there
is need to enhance risk identification through improving the mechanism for
categorizing risks as the strategy for enhancing profitability. The process of risk
identification in commercial banks should be very comprehensive covering all
departments and sections as this will enable management to effectively implement
risk identification strategies. Commercial banks in Mogadishu should look at other
factors that directly affect profitability. These include the availability of qualified
personnel to implement risk management, the level of technology applied and the
effect of changes in demand. The study contributed to new knowledge through the
following; one of the most prominer~t findings from this study is the fact that it has
provided evidence to support the fact that risk management can improve the state
of profitability of the commercial in Mogadishu Somalia.
Description
A thesis submitted to the college of economics and management in partial fulfillment of the requirement for the award of master of business administration degree in accounting and finance of Kampala International University
Keywords
Risk management, Profitability of commercial banks