Impact of financial decisions on Banks 'profitability: A case of study of Access Bank Rwanda PLC

Abstract

This research paper explores the impact of financing decisions on the financial performance of commercial banks, focusing on Access Bank Rwanda PLC. The study aims to improve understanding of how financing decisions influence bank profitability and analyze the relationship between these decisions and profitability. A mixed-method approach was used, utilizing primary. Primary data was collected through structured questionnaires to key stakeholders at Access Bank Rwanda. The research methodology includes multiple regression analysis to predict bank profitability based on several independent variables. The model specification is detailed, with the regression equation representing the dependent variable, independent variables, intercept, coefficients, and error term. Data analysis was conducted using SPSS due to its robust capabilities in handling complex statistical analyses. The study used SPSS to analyze data on financing decisions and profitability metrics. The regression model showed a strong linear relationship between financial decision metrics and net interest income, with loans and advances to customers having a significant positive impact. However, the adjusted R² suggests potential overfitting. Loans and advances to customers had a nearly significant positive effect on Return on Assets (ROA), while NPL had a strong negative effect. The model also showed a strong relationship between financial decision metrics and Return on Equity (ROE), with loans and advances to customers having a strong positive effect, while NPL had a significant negative effect.