Selected Macro-Economic Variables and Financial Performance of Commercial Banks in South Sudan
Yai AdhuongStrategic Journal of Business & Change Management
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Abstract
The intermediation provided by banks depends on the efficiency of the bank. Commercial banks in South Sudan have continued to experience poor performance. This has been a significant source of concern for the South Sudan's financial sector over the years. Studies on financial performance and macroeconomic factors have largely not been based on South Sudan Banks. The general objective of the study was to establish the effect of selected macro-economic variables on financial performance of commercial banks in South Sudan. The study adopted explanatory research design. A census of 29 commercial banks listed in South Sudan that were in operation from 2012 to 2020 was targeted. The audited financial statements of the listed commercial banks served as the source of secondary panel data. Data collection was by use of a document review guide. Data analysis for the study was by use of regression model and correlation. The study was based on Vector autoregressive (VAR) model to assess relationship between macro-economic variables and financial performance of commercial banks. From the findings of the study, it was established that interest rate has no significant effect on financial performance of commercial banks in South Sudan; Gross Domestic Product has no significant effect on financial performance of commercial banks in South Sudan; inflation rate has no significant effect on financial performance of commercial banks in South Sudan and exchange rate has no significant effect on financial performance of commercial banks in South Sudan. Macroeconomic variables such as interest rate Gross domestic product, inflation rate and exchange rate. The study suggested that commercial banks' management committees continuously monitor inflation rates in order for them to adjust their loan products and services in line with the inflation rate; commercial banks should design dynamic interest rate policies that would lead to growth by attracting many customers; and commercial banks should ensure that the business environment is favorable in order to encourage investment in them since they have the ability to offer a variety of financial services.
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