EFFECT OF FOREIGN DIRECT INVESTMENT ON BANK PERFORMANCE IN AFRICA

Abstract

The rate of Foreign Direct Investment in Africa has declined in recent decades. Foreign Direct Investment offers a range of immediate advantages including investment, employment, and foreign currency. For this reason, this research is to assess the effect of foreign direct investment on the financial performance of banking firms in Africa. Using exploration research design to analyze quantitative data collected from selected banks in Africa. The sample size used in this work is 21 banks. The findings revealed that there is a significant and positive effect between FDI and the profit margins of banks in Africa. It also discovered in Model 1 that foreign direct investment (FDI) had a positive and significant impact on the return of assets of banks in Africa. As a result, foreign direct investment (FDI) helps businesses increase their profitability by increasing their return on assets. And finally, that foreign direct investment (FDI) had a favourable and statistically significant effect on the return of equity of African banks. It is recommended that African banks make their charges affordable and cheaper for investors to use the banking industry to receive their FDI into Africa. Various governments in Africa should initiate policies that will aid the banks operating in Africa to have enough liquidity to manage it affairs and activities.