Abstract

This study explores the effect of funds management on the profitability of commercial banks in Cameroon. Funds management is a crucial component in banking, impacting the operational efficiency and financial outcomes of banks. Proper management of funds ensures liquidity, reduces risks, and enhances profitability.

The study examines how commercial banks in Cameroon allocate and manage their financial resources. Factors such as liquidity management, loan policies, asset allocation, and risk management are assessed. Banks need to maintain a balance between liquidity and profitability, ensuring that they meet customer demands without compromising returns.

Effective funds management involves optimizing interest rates, managing loan defaults, and diversifying investments. Commercial banks in Cameroon face challenges such as fluctuating interest rates, inflation, and economic instability, which affect their ability to manage funds effectively.

Data were collected through financial reports, interviews with bank managers, and reviews of banking regulations. The findings indicate that commercial banks with robust funds management strategies show higher profitability levels. Banks that diversify their loan portfolios, manage risks prudently, and maintain liquidity tend to outperform those with weaker financial management systems.

The research highlights the importance of regulatory compliance and the role of central banking policies in guiding commercial banks. Proper funds management requires adherence to legal frameworks, such as the Bank of Central African States (BEAC) regulations.

In conclusion, funds management has a direct impact on the profitability of commercial banks in Cameroon. Recommendations include strengthening risk management frameworks, improving loan recovery processes, and enhancing financial planning within banks. These measures can ensure that banks in Cameroon remain profitable while serving the needs of their customers.

Keywords: funds management, profitability, commercial banks, Cameroon, liquidity, risk management, asset allocation, financial stability.