Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda

Mbonigaba Celestin

doi:doi:10.11648/j.ijafrm.20190403.13

| Peer-Reviewed

Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda

Mbonigaba Celestin

Published in International Journal of Accounting, Finance and Risk Management (Volume 4, Issue 3)

Received: 13 July 2019 Accepted: 5 August 2019 Published: 29 August 2019

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

The main objectives of this study were to examine the link between Capital Markets and the Financial Performance of Commercial Bank. The study was guided by three objectives such as: To examine the effect of equity market on the financial performance, to assess the effect of bond market on the financial performance, to establish the effect of securitized products on the financial performance of Bank of Kigali. The study adopted quantitative approach to collect data from 32 respondents’ employees of BK by using purposive sampling technique. Data collected was analyzed using SPSS, and the instruments of data collection were questionnaire, interview, and documentary techniques. The results show that perceptions of respondents about effect of bond market on the financial performance of Bank of Kigali Rwanda show that more than 84.4% of respondents confirmed that Size of Equity market affects market capitalization for generating net profit margin for BK; and 84.4% that size dimension of equity market reflects turnover ratio of BK. The R-Square was.759 while ANOVA shows the Sum of Squares of 7.875. The results on the effect of bond market on the financial performance of Bank of Kigali confirmed by 84.4% of respondents who said that Bond market of BK helps to increase its interest income; and 78.1% of respondents confirmed that accessibility of Bond market facilitates an increase of capital gain to BK in Rwanda. R-Square was.610 and ANOVA table shows that Sum of Squares of 7.875. The effect of securitized products on the financial performance of Bank of Kigali confirmed by more than 84.4% who said that commercial mortgages offered by BK increases the internal return of this commercial bank; 78.1% of respondents participated in the study confirmed credit card receivables facilities BK to increase income from borrowers of this bank; and 68.8% agreed that the Auto loans and student loans of BK increase the net profit margin. R-Square was 743 and its adjusted R-Square was.638. ANOVA table shows that Sum of Squares was 7.875 combining the regression of 5.850; and residual of 2.025. Mean Square was.650 for regression while.092 was on the side of residual in the Mean Square. As conclusion, based to the findings, there is significant positive effect of Capital Market son the financial performance of Bank of Kigali in Rwanda.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 4, Issue 3)
DOI	10.11648/j.ijafrm.20190403.13
Page(s)	95-101
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Capital Market, Financial Performance, Commercial Banks

References

[1]	Aghion, P., Bacchetta, P. & Banerjee, A. (2004), Financial Development and the Instability Of Open Economies, National Bureau of Economic Research, Working Paper No. 10246.
[2]	Arestis, P., Demetriades, P. O. & Luintel, K. B. (2001), Financial development and Economic Growth: The Role of Stock Markets’, Journal of Money, Credit and Banking, February, Vol. 33, No.
[3]	Baronov, D. (2004), Conceptual foundations of social research methods, Paradigm Publishers, Boulder.
[4]	Beck, T. & Levine, R. (2017), ‘Stock markets, Banks and Growth: Correlation or causality’, The World Bank, Policy Research Paper No. 2670.
[5]	Beck, T. (2006), ‘Creating an efficient financial system: Challenges in a global economy’, World Bank, Working Paper No. 3856.
[6]	Choi, S., Smith, B. & Boyd, J. (1996), ‘Inflation, financial markets, and capital formation’, The Federal Reserve Bank of St. Louis Review, Vol. May/.
[7]	Claessens, S., Klingebiel, D. & Schmukler, S. L. (2016), ‘Explaining the migration of stocks from exchanges in emerging economies to international centers’, The World Bank, Policy Research Working Paper No. 2816. 58 (66).
[8]	Damodaran, A. (2001), corporate finance: Theory and practice, 2nd ed, John Wiley & Sons Inc., New York. Development’, Journal of Development Economics, vol. 66 (2 Dec), pp. 465-504. FEAS (2006), ‘Market Capitalisation & Index’, Federation of Euro-Asian Stock Exchanges, Found at: http://www.feas.org/Member.cfm?MemberID=10.
[9]	Levine, R. & Zervos, S. (1996). Stock market development and long-run growth. The World Bank Economic Review, Volume 10, Issue 2.
[10]	Levine, R. and Zervos S. (1998), ‘Stock Markets, Banks, and Economic Growth’, American Economic Review 88, p. 537-558.
[11]	McKinnon, R. I. (1973). Money and capital in economic development. The Brookings Institution, 1775 Massachusetts Avenue, N. W., Washington D. C. Retrieved March 2011.
[12]	McKinnon, R. I. (1973), Money and Capital in Economic Development, Brooking Institution, Washington, DC, Microfinance Bill, 2006.
[13]	Uth off, A. (2000), ‘Pension reform in Chile’, in Sawyers, L., Schydlowsky, D. & Nickerson, D. (eds), Emerging financial markets in the global economy, American University, Washington DC.
[14]	World Bank (1989). Financial systems and development. World Development Report, World Bank and Oxford University Press, pg 26, Washington DC. Washington DC.

Cite This Article

Plain Text BibTeX RIS

APA Style

Mbonigaba Celestin. (2019). Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda. International Journal of Accounting, Finance and Risk Management, 4(3), 95-101. https://doi.org/10.11648/j.ijafrm.20190403.13

Copy | Download

ACS Style

Mbonigaba Celestin. Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda. Int. J. Account. Finance Risk Manag. 2019, 4(3), 95-101. doi: 10.11648/j.ijafrm.20190403.13

Copy | Download

AMA Style

Mbonigaba Celestin. Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda. Int J Account Finance Risk Manag. 2019;4(3):95-101. doi: 10.11648/j.ijafrm.20190403.13

Copy | Download

@article{10.11648/j.ijafrm.20190403.13,
  author = {Mbonigaba Celestin},
  title = {Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {4},
  number = {3},
  pages = {95-101},
  doi = {10.11648/j.ijafrm.20190403.13},
  url = {https://doi.org/10.11648/j.ijafrm.20190403.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20190403.13},
  abstract = {The main objectives of this study were to examine the link between Capital Markets and the Financial Performance of Commercial Bank. The study was guided by three objectives such as: To examine the effect of equity market on the financial performance, to assess the effect of bond market on the financial performance, to establish the effect of securitized products on the financial performance of Bank of Kigali. The study adopted quantitative approach to collect data from 32 respondents’ employees of BK by using purposive sampling technique. Data collected was analyzed using SPSS, and the instruments of data collection were questionnaire, interview, and documentary techniques. The results show that perceptions of respondents about effect of bond market on the financial performance of Bank of Kigali Rwanda show that more than 84.4% of respondents confirmed that Size of Equity market affects market capitalization for generating net profit margin for BK; and 84.4% that size dimension of equity market reflects turnover ratio of BK. The R-Square was.759 while ANOVA shows the Sum of Squares of 7.875. The results on the effect of bond market on the financial performance of Bank of Kigali confirmed by 84.4% of respondents who said that Bond market of BK helps to increase its interest income; and 78.1% of respondents confirmed that accessibility of Bond market facilitates an increase of capital gain to BK in Rwanda. R-Square was.610 and ANOVA table shows that Sum of Squares of 7.875. The effect of securitized products on the financial performance of Bank of Kigali confirmed by more than 84.4% who said that commercial mortgages offered by BK increases the internal return of this commercial bank; 78.1% of respondents participated in the study confirmed credit card receivables facilities BK to increase income from borrowers of this bank; and 68.8% agreed that the Auto loans and student loans of BK increase the net profit margin. R-Square was 743 and its adjusted R-Square was.638. ANOVA table shows that Sum of Squares was 7.875 combining the regression of 5.850; and residual of 2.025. Mean Square was.650 for regression while.092 was on the side of residual in the Mean Square. As conclusion, based to the findings, there is significant positive effect of Capital Market son the financial performance of Bank of Kigali in Rwanda.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda
AU  - Mbonigaba Celestin
Y1  - 2019/08/29
PY  - 2019
N1  - https://doi.org/10.11648/j.ijafrm.20190403.13
DO  - 10.11648/j.ijafrm.20190403.13
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 95
EP  - 101
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20190403.13
AB  - The main objectives of this study were to examine the link between Capital Markets and the Financial Performance of Commercial Bank. The study was guided by three objectives such as: To examine the effect of equity market on the financial performance, to assess the effect of bond market on the financial performance, to establish the effect of securitized products on the financial performance of Bank of Kigali. The study adopted quantitative approach to collect data from 32 respondents’ employees of BK by using purposive sampling technique. Data collected was analyzed using SPSS, and the instruments of data collection were questionnaire, interview, and documentary techniques. The results show that perceptions of respondents about effect of bond market on the financial performance of Bank of Kigali Rwanda show that more than 84.4% of respondents confirmed that Size of Equity market affects market capitalization for generating net profit margin for BK; and 84.4% that size dimension of equity market reflects turnover ratio of BK. The R-Square was.759 while ANOVA shows the Sum of Squares of 7.875. The results on the effect of bond market on the financial performance of Bank of Kigali confirmed by 84.4% of respondents who said that Bond market of BK helps to increase its interest income; and 78.1% of respondents confirmed that accessibility of Bond market facilitates an increase of capital gain to BK in Rwanda. R-Square was.610 and ANOVA table shows that Sum of Squares of 7.875. The effect of securitized products on the financial performance of Bank of Kigali confirmed by more than 84.4% who said that commercial mortgages offered by BK increases the internal return of this commercial bank; 78.1% of respondents participated in the study confirmed credit card receivables facilities BK to increase income from borrowers of this bank; and 68.8% agreed that the Auto loans and student loans of BK increase the net profit margin. R-Square was 743 and its adjusted R-Square was.638. ANOVA table shows that Sum of Squares was 7.875 combining the regression of 5.850; and residual of 2.025. Mean Square was.650 for regression while.092 was on the side of residual in the Mean Square. As conclusion, based to the findings, there is significant positive effect of Capital Market son the financial performance of Bank of Kigali in Rwanda.
VL  - 4
IS  - 3
ER  -

Copy | Download

Author Information

Mbonigaba Celestin

Business and Development Studies, Kibogora Polytechnic, Nyamasheke, Rwanda

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Mbonigaba Celestin. (2019). Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda. International Journal of Accounting, Finance and Risk Management, 4(3), 95-101. https://doi.org/10.11648/j.ijafrm.20190403.13

Copy | Download

ACS Style

Mbonigaba Celestin. Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda. Int. J. Account. Finance Risk Manag. 2019, 4(3), 95-101. doi: 10.11648/j.ijafrm.20190403.13

Copy | Download

AMA Style

Mbonigaba Celestin. Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda. Int J Account Finance Risk Manag. 2019;4(3):95-101. doi: 10.11648/j.ijafrm.20190403.13

Copy | Download

@article{10.11648/j.ijafrm.20190403.13,
  author = {Mbonigaba Celestin},
  title = {Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {4},
  number = {3},
  pages = {95-101},
  doi = {10.11648/j.ijafrm.20190403.13},
  url = {https://doi.org/10.11648/j.ijafrm.20190403.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20190403.13},
  abstract = {The main objectives of this study were to examine the link between Capital Markets and the Financial Performance of Commercial Bank. The study was guided by three objectives such as: To examine the effect of equity market on the financial performance, to assess the effect of bond market on the financial performance, to establish the effect of securitized products on the financial performance of Bank of Kigali. The study adopted quantitative approach to collect data from 32 respondents’ employees of BK by using purposive sampling technique. Data collected was analyzed using SPSS, and the instruments of data collection were questionnaire, interview, and documentary techniques. The results show that perceptions of respondents about effect of bond market on the financial performance of Bank of Kigali Rwanda show that more than 84.4% of respondents confirmed that Size of Equity market affects market capitalization for generating net profit margin for BK; and 84.4% that size dimension of equity market reflects turnover ratio of BK. The R-Square was.759 while ANOVA shows the Sum of Squares of 7.875. The results on the effect of bond market on the financial performance of Bank of Kigali confirmed by 84.4% of respondents who said that Bond market of BK helps to increase its interest income; and 78.1% of respondents confirmed that accessibility of Bond market facilitates an increase of capital gain to BK in Rwanda. R-Square was.610 and ANOVA table shows that Sum of Squares of 7.875. The effect of securitized products on the financial performance of Bank of Kigali confirmed by more than 84.4% who said that commercial mortgages offered by BK increases the internal return of this commercial bank; 78.1% of respondents participated in the study confirmed credit card receivables facilities BK to increase income from borrowers of this bank; and 68.8% agreed that the Auto loans and student loans of BK increase the net profit margin. R-Square was 743 and its adjusted R-Square was.638. ANOVA table shows that Sum of Squares was 7.875 combining the regression of 5.850; and residual of 2.025. Mean Square was.650 for regression while.092 was on the side of residual in the Mean Square. As conclusion, based to the findings, there is significant positive effect of Capital Market son the financial performance of Bank of Kigali in Rwanda.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Correlational Study Between Capital Markets and Financial Performance of Commercial Banks in Rwanda
AU  - Mbonigaba Celestin
Y1  - 2019/08/29
PY  - 2019
N1  - https://doi.org/10.11648/j.ijafrm.20190403.13
DO  - 10.11648/j.ijafrm.20190403.13
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 95
EP  - 101
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20190403.13
AB  - The main objectives of this study were to examine the link between Capital Markets and the Financial Performance of Commercial Bank. The study was guided by three objectives such as: To examine the effect of equity market on the financial performance, to assess the effect of bond market on the financial performance, to establish the effect of securitized products on the financial performance of Bank of Kigali. The study adopted quantitative approach to collect data from 32 respondents’ employees of BK by using purposive sampling technique. Data collected was analyzed using SPSS, and the instruments of data collection were questionnaire, interview, and documentary techniques. The results show that perceptions of respondents about effect of bond market on the financial performance of Bank of Kigali Rwanda show that more than 84.4% of respondents confirmed that Size of Equity market affects market capitalization for generating net profit margin for BK; and 84.4% that size dimension of equity market reflects turnover ratio of BK. The R-Square was.759 while ANOVA shows the Sum of Squares of 7.875. The results on the effect of bond market on the financial performance of Bank of Kigali confirmed by 84.4% of respondents who said that Bond market of BK helps to increase its interest income; and 78.1% of respondents confirmed that accessibility of Bond market facilitates an increase of capital gain to BK in Rwanda. R-Square was.610 and ANOVA table shows that Sum of Squares of 7.875. The effect of securitized products on the financial performance of Bank of Kigali confirmed by more than 84.4% who said that commercial mortgages offered by BK increases the internal return of this commercial bank; 78.1% of respondents participated in the study confirmed credit card receivables facilities BK to increase income from borrowers of this bank; and 68.8% agreed that the Auto loans and student loans of BK increase the net profit margin. R-Square was 743 and its adjusted R-Square was.638. ANOVA table shows that Sum of Squares was 7.875 combining the regression of 5.850; and residual of 2.025. Mean Square was.650 for regression while.092 was on the side of residual in the Mean Square. As conclusion, based to the findings, there is significant positive effect of Capital Market son the financial performance of Bank of Kigali in Rwanda.
VL  - 4
IS  - 3
ER  -

Copy | Download