Abstract: Commercial banks all over the world play a significant role in the allocation of economic resource of countries. However, banks like other financial business entities are entitled to profits for the services which they provide. However, the pursuit for profitability comes with its own risks. The continuous decline in profitability of commercial banks in Nigeria is raising high concerns in all quarters. The current study sought to critically review literature on fundamental risk factors and profitability of commercial banks in Nigeria and provide suggestions for further research. Findings of the study provided evidence of research gaps which stem from conceptual, contextual, methodological and knowledge gaps. Most studies were centered on other countries other than Nigeria. Also, most of the studies only considered one measure of profitability. In addition, bank size and its moderating effect on the relationship between fundamental risk factors and profitability were not considered in previous studies. Furthermore, previous studies did not consider structural breaks such as the Central Bank of Nigeria regulation of minimum capital base requirement and the global financial crises. The study recommends that further research be undertaken to establish the effect of fundamental risk factors on profitability of commercial banks in Nigeria where measures of profitability such as return on equity, return on asset and net interest margin will be adopted. Also, bank size and its moderating effect on the relationship between fundamental risk factors and profitability should be considered. Furthermore, further research should consider the effect of the 2007/2008 global financial crises and Central Bank of Nigeria minimum capital requirement on profitability of commercial banks in Nigeria.
Keywords: Fundamental Risk Factors, Inflation, Interest Rate, Exchange Rate, Profitability and Commercial Banks.
Title: A CRITICAL REVIEW OF LITERATURE ON FUNDAMENTAL RISK FACTORS AND PROFITABILITY OF COMMERCIAL BANKS IN NIGERIA
Author: MALGIT AMOS AKIMS, AMBROSE JAGONGO
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Research Publish Journals
