How working capital management affects the profitability of Afriland First Bank of Cameroon? A case study

Piabuo, Serge Mandiefe (2016): How working capital management affects the profitability of Afriland First Bank of Cameroon? A case study. Published in: Business and Management Research Journal , Vol. 6, No. 7 (July 2016): pp. 89-99.

Abstract

The main objective of this study is to assess the effect of working capital management on the profitability of Afriland First Bank Cameroon. Time series data from 2002 to 2013 was extracted from the financial statement of the bank. Correlation analysis and ordinary least Square regression were used to determine how working capital affects profitability. The findings of this study show that working capital management effectively influences the performance of Afriland First Bank. The analysis revealed that customer deposits, the size of the bank, outstanding expenditure and return on assets all have a positive impact on bank profitability and are statistically significant while loan portfolio has a positive impact on bank performance but is statistically insignificant. On the other hand, reserves have a negative impact on bank profitability. Thus efficient management of working capital is prerequisite for growth and profitability of commercial banks in general and Afriland first Bank in particular.

• Item Type: MPRA Paper
• Language: English
• Keywords: Profitability , Working capital management, Return on assets
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance ; Insurance Companies ; Actuarial Studies; G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking ; Venture Capital ; Brokerage ; Ratings and Ratings Agencies; G - Financial Economics > G3 - Corporate Finance and Governance; G - Financial Economics > G3 - Corporate Finance and Governance > G31 - Capital Budgeting ; Fixed Investment and Inventory Studies ; Capacity; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill

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