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| Impact of Internal Factors on Profitability of Deposit Money Banks |
Orikara Patience Chioma
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Abstract:
This Study examined the impact of internal factors on profitability of banks in Sub Saharan (SSA) as its key objective. Specific objectives are evaluation of the impact of: board composition with more nonexecutive directors, employee productivity and capital base on return on assets of the banks. Panel data for the period 2004-2016 on selected banks from six SSA countries were used. The data were analyzed with panel data multiple regression technique under Fixed Effects model as indicated by Hausman test. Findings revealed among others that the three independent variables have positive significant impact on return on assets. Also, the three variables indicate positive significant correlation with the return on assets while employee productivity exhibits equally positive significant relationship with board composition. The Study therefore, concludes that internal factors have positive significant impact on the profitability of deposit money banks in SSA. Based on the conclusion, it is recommended among others that deposit money banks in SSA should compose their board of directors in such a mix that ensures that number of nonexecutives directors is more than executive directors and that they should put in place measures to motivate their employees for greater productivity which leads to higher profitability
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