Evaluating The Relationship Between Risk and Profitability of Non-Bank Financial Institutions of Selected Savings and Loans Companies in Accra

Proceedings of the 7th International Conference on Advanced Research in Management, Business and Finance, 2024

Year: 2024

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Evaluating The Relationship Between Risk and Profitability of Non-Bank Financial Institutions of Selected Savings and Loans Companies in Accra

Cynthia Baidoo

 

 

ABSTRACT:

This study aimed at evaluating the relationship between the risk and profitability of Non-Bank Financial Institutions in Ghana. Specifically, the study examined the relationships between credit risk, liquidity risk, operational risk, interest rate risk and profitability of sampled Savings and Loans’ Companies in Ghana, over a period of seven years, 2015 to 2022. A quantitative methodology was adopted, using secondary data sources of the selected companies. Secondary data was be gathered and converted into a time-series setting. The study adopted both descriptive and explanatory, in order to arrive at a logical conclusion. Based on the findings the researchers concluded that there is a strong significant relationship between the risk and returns of the sampled Savings and Loans Companies in Accra. The study also revealed that credit risk, operational risk and interest rate risk were the significant predictors of profitability. The liquidity risk and firm size were however insignificant in determining the profitability of the sampled Savings and Loans Companies in Accra. The study recommends that Savings and Loans Companies must effectively and continuously manage their exposures to credit, operational, liquidity, and interest rate risks in order to enhance their overall profitability.

keywords: Credit Exposure Credit Risk; Firm Size; Liquidity Risk; Interest Rate Risk