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.
Highlights
IntroductionIt becomes unavoidable to know the attributes (like expertise, composition, gender diversity, size and the frequency of meetings) of the risk committee that can enhance efficient formulation and administration of the risk policies of the organisation for a reduced risk exposure
The study found that both enterprise risk management (ERM) and risk committee efficiency have the greatest effect on the earning capacity of Nigerian firms (R2 = 60%) than the rest two countries
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%)
Summary
It becomes unavoidable to know the attributes (like expertise, composition, gender diversity, size and the frequency of meetings) of the risk committee that can enhance efficient formulation and administration of the risk policies of the organisation for a reduced risk exposure Seeing that both the ERM and the RMC are novelties established to reduce and control risks of the enterprise, this surged inquisitiveness on us to know if these two risk management concepts could simultaneously work to minimize the risks of the firm and maximize the financial performance thereof. Though among the ones that had studied African nations none had taken broad samples of African nations the way Rao (2018) studied the same subject on Gulf Cooperation Council that consists of six nations, which creates a gap in literature
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