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Impact of Financial Risk Management Practices on Financial Performance: Evidence from Commercial Banks in Botswana

Applied Finance and Accounting

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Field Value
 
Title Impact of Financial Risk Management Practices on Financial Performance: Evidence from Commercial Banks in Botswana
 
Creator C. R., Sathyamoorthi
Mapharing, Mogotsinyana
Mphoeng, Mphoeng
Dzimiri, Mashoko
 
Description The study examined the impact of financial risk management practices on the financial performance of commercial banks in Botswana. The study used Return on Asset and Return on Equity to measure financial performance. Inflation, Interest rates, total debt to total assets, total debt to total equity, total equity to total assets and loan deposit ratios were used as proxies for financial risk management. The research population was all the 10 commercial banks in Botswana and the study covered a period of 8 years from 2011 to 2018. This descriptive study sourced monthly secondary data from Bank of Botswana Financial Statistics database. Descriptive statistics, correlation and regression analyses were applied to analyze the data. The results from regression analysis showed that interest rates had a negative and significant impact on return on assets and on return on equity. On the other hand, total debt to total assets showed a negative and insignificant effect on return on assets. However, total debt to total assets, revealed a positive and insignificant effect on return on equity. The loan deposit ratio indicated a negative and significant impact on return on assets and on return on equity. Findings suggest that banks should strike a proper balance between financial risk management practices and financial performance by engaging in appropriate market, credit, and liquidity risk management practices that will ensure safety for their banks and yield positive profits.
 
Publisher Redfame publishing
 
Contributor
 
Date 2019-12-12
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://redfame.com/journal/index.php/afa/article/view/4650
10.11114/afa.v6i1.4650
 
Source Applied Finance and Accounting; Vol 6, No 1 (2020); 25-39
2374-2429
2374-2410
 
Language eng
 
Relation http://redfame.com/journal/index.php/afa/article/view/4650/4834
 
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