Publication Details
Abstract
The importance of examining the exchange rate effect has on banks profitability cannot be over emphasized, particularly, given this era of Global Financial Integration. Most banks are said to suffer from erosion of their profit arising from exposure to fluctuations in international currencies, especially, when proper hedging strategies are not adopted. The international financial reporting standards are set to lighten the effect of this exposure, also to guide firms regarding the risks faced in international markets. Many developing countries hadn’t complied with these standards nor adopted and reported them in their full form. This study used secondary data methodology and information obtained regarding international banks to examine the relative effect of exchange rate on banks profitability on a period of 5 years (from 2013- to 2018), also this research investigated the firm’s compliance rate with the International Financial Reporting Standard 9. In order to get the independent effect of exchange rate on banks profitability the study used Return on Equity to identify banks profitability. Also, the study introduced two control variables (bank size, inflation) into the study in order to conduct a regression analysis of the effect.