Asset Liability Management and the Profitability of Listed Banks in Ghana

Tee, Evans

doi:10.9790/5933-0803040914

Cited by 8 publications

(8 citation statements)

References 8 publications

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“…Where Y stands for the bank's profitability, Ai stands for the ith asset, Lj stands for the jth liability, l represents the bank's number, T represents a period, β2i represents the rate of return of the Asset, β3j is the rate of cost for liabilities, A1 stands for the constant term, µlt stands for the stochastic term GDP and inflation are added to the model to account for the impact of macroeconomic factors in the analysis. Works by Tamiru (2013) and other authors lend credence to this (Tee, 2017). In light of this, the updated model provided in this paper is as follows:…”

Section: Empirical Modelsupporting

confidence: 52%

Effect of Asset-Liability Management on Bank Profitability: Evidence from Afghanistan Banking Sector

Najimi¹,

Wani²,

Deshpande³

2022

KJEMS

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Much research has been carried out in various nations to examine the effect of ALM (Asset-liability Management) on Bank profitability. In developing nations, this issue of banks' profitability has attained relatively little attention. Existing literature, in the context of the Afghan commercial bank industry, has only related banks' endogenous factors and exogenous factors to banks' profitability and has not explicitly generated a clear relationship between balance-sheet both sides components (ALM) and the value of the bank. This paper attempted to find out the impact of Asset- liabilities components (AML), and macroeconomic factors on the banks' profitability, in the Afghanistan banking sector's context keeping control variables in place. The research was empirical in nature and the study period was between 2011 and 2021. The research population in Afghanistan consists of twelve commercial banks. The annual audited balance sheet, income statements of the commercial banks, national statistics, and World Bank dataset served as the source of secondary data. Random effect and fixed effect regression analysis was employed to analyze the data. The research accepts that there is a link between the majority of the categories of assets and liabilities, macroeconomics as their coefficients are confirmed to be statistically significant.

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Section: Empirical Modelsupporting

confidence: 52%

Effect of Asset-Liability Management on Bank Profitability: Evidence from Afghanistan Banking Sector

Najimi¹,

Wani²,

Deshpande³

2022

KJEMS

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“…To be profitable, banks therefore need to be efficient in ALM. Several studies by Pragathi and Veena (2018), Mohanty and Mehrotra (2018), Tee (2017), Sanjay and Shrestha (2015), and Sheela and Bastray (2014), have confirmed that ALM affect profitability of banks. Despite the importance of ALM and claim that it enhances profitability, there is still lack of empirical evidence to bring this to a conclusion.…”

Section: Introductionmentioning

confidence: 88%

“…This is contrary to a study by Rao and Lakew (2012) on macroeconomic factors and banks' profitability in Ethiopia that revealed insignificant but positive effects of inflation on bank's profitability. Tee (2017) conducted a research from 2008 to 2012 to access the impact of external factors on ALM and income of financial institutions in Ghana, using quantitative research design. The research established that GDP and interest rates were the main macroeconomic factors that negatively affected profitability.…”

Section: Theoretical Foundationmentioning

confidence: 99%

“…Asset liability management is managing assets and liabilities simultaneously in order to minimize the adverse effect of interest rate volatility, provide liquidity and enhance the financial performance. Banks have to keep a good balance among spreads, long term viability and profitability; which is measured in terms of return on assets (Tee, 2017). Return on assets gives the comprehensive measure of overall bank's financial performance and it is the total earning to total asset of a bank.…”

Section: Introductionmentioning

confidence: 99%

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Effect of Macroeconomic Factors on the relationship between Asset Liability Management and Profitability of Commercial Banks in Kenya

2023

JOFA

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The study sought to establish the influence of macroeconomic factors on the relationship between asset liability management and profitability among commercial banks in Kenya. The study was anchored on liability management theory. The study also drew its theoretical support from commercial loan theory, the market power theory and the efficient structure theory. The study was guided by the positivism philosophical paradigm and a cross sectional descriptive design adopted. The population of the study was the 42 commercial banks in Kenya that were operational between 2015 and 2020. Secondary data was obtained from the annual reports of CBK and audited banks' financial statements from 2015 to 2020. Data was analyzed using descriptive and inferential statistics. The findings indicated that asset liability management had a statistically significant influence on the profitability among commercial banks in Kenya. Macroeconomic factors were found to have a statistically significant influence on the relationship between asset liability management and profitability among commercial banks in Kenya. The study has contributed to theory, policy and management in relation to how macroeconomic factors influences relationship between asset liability management and profitability among commercial banks in Kenya. In light of these findings, banks should ensure that asset liability management policies are crafted based on appropriate strategies for profitability enhancement. The study recommends that policy makers should enhance the economic growth and develop strategies to control inflation levels for the banking sector to thrive.

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“…-Not to attract resources of doubtful origin in order to preserve the bank's image and reputation (Lavrushin O.I., 2012). Evans Tee in the paper "Asset Liability Management and the Profitability of Listed Banks in Ghana" (Evans Tee, 2017) claims that liability management only not enough for financial resources management. He also provides evidences that liability management in some countries has negative effect on bank activity and profitability.…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Resources Management in Commercial Banks: Evidence From Latvia

Konovalova¹,

Caplinska²

2020

IJFR

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Financial resources management issues are relevant for each commercial bank. Those banks that operate with an excess of free financial resources lose profitability, but the liquidity of such banks is quite high. Other banks that conduct aggressive policy aiming to place all the available resources with maximum efficiency, are forced to seek solutions to the problem of locating additional liquid funds, in order to ensure timely fulfilment of liabilities. In this article, the authors analyze the state of the resource base of Latvian commercial banks, identify reserves for increasing the efficiency of banks and propose a methodology for optimizing the attraction and placement of resources in commercial banks. Since bank resources management involves two interrelated issues – equity capital management and management of liabilities (attracted and borrowed funds), the authors successively consider two sides of this process. Besides, the process of equity capital and liabilities management is inseparably linked with active transactions, i.e. with the use of resources, therefore the research also focuses on the interrelation between passive and active transactions of the bank and on the development of a methodology for optimizing the attraction and allocation of bank resources. The purpose of the research is to analyse passive operations in Latvian banks, to assess the formation of their resource base and its management, as well as to work out some recommendations on how to update the management of the combined (aggregate) resource base in Latvian commercial banks. The authors have put forward a following hypothesis: the decline in financial resources leads to an increase in the bank's efficiency, and vice versa, the increase in financial resources leads to an inefficient redistribution of funds in the banking activity. During the study, this hypothesis was justified. The theoretical and methodological basis for the research includes scientific works by Latvian and foreign authors, special economic literature, Latvian legislation, regulations of the Bank of Latvia and of the Financial and Capital Market Commission, recommendations of the Basel Committee on Banking Supervision, EU Directives. The authors used such research methods as economic analysis, method of comparison, economic grouping, statistical methods, etc. The application of the proposed methodology for optimizing the attraction and placement of resources is considered on the example of Latvian commercial banks.

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Asset Liability Management and the Profitability of Listed Banks in Ghana

Cited by 8 publications

References 8 publications

Effect of Asset-Liability Management on Bank Profitability: Evidence from Afghanistan Banking Sector

Effect of Asset-Liability Management on Bank Profitability: Evidence from Afghanistan Banking Sector

Effect of Macroeconomic Factors on the relationship between Asset Liability Management and Profitability of Commercial Banks in Kenya

Financial Resources Management in Commercial Banks: Evidence From Latvia

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