TITLE:
Enterprise Risk Management, Risk Committee, and Earning Capacity of African Banks: A Comparative Approach
AUTHORS:
Augustine Chukwujekwu Odubuasi, Nkechi Theresa Ofor, Felix Ubaka Ilechukwu
KEYWORDS:
Enterprise Risk Management, Risk Committee, Earning Capacity, African Banks, Comparative Approach
JOURNAL NAME:
Modern Economy,
Vol.13 No.1,
January
19,
2022
ABSTRACT: This study did a
comparative analysis on the effect of enterprise risk management (ERM), risk
committee, on earning capacity of African banks. The study covered a study
period of ten (10) years spanning from 2009 to 2018. The study covered Nigeria,
Ghana, and South Africa. Data for the study were gotten from the fiscal reports
of the banks under investigation. The study was analyzed using the panel data
methodology. The study found that both ERM and risk committee efficiency have the greatest effect on the earning capacity of
Nigerian firms (R2 = 60%) than the rest two countries. More so, our
model has shown that South Africa has performed on a closer chase to Nigeria,
in generating returns to the shareholders using the regressors mentioned above
(R2 = 56%). Finally, Ghana has performed the least so to say as the
same variables generated or made the least input to ROE (R2 = 24%).
Hence, we conclude ERM and risk committee are instrumental to improved earnings
capacity of selected African banks. As such, the study recommends that regulators in African countries should enforce strict
compliance and ensure that the ERM policies are implemented across banks
in Africa. Lastly, corporate board should engage men that are knowledgeable in
risk management.