statistically significant. The literature review on determinants of bank … Panel data regression approach was employed with model selection subjected to Hausman tests. The findings of the study show that capital adequacy, leverage, liquidity, and ownership have statistically significant and positive relationship with banks' profitability. – The approach is to use an unbalanced pooled time series dataset of 23 banks. Finally , the e f fect of inflation is also another important determinant of banking performance. The study revealed among others that board with more nonexecutive directors has significant positive effect on ROA and NIM with significant positive relationship with ROA and NIM. The bank, as an intermediary in the modern economy must be profitable, and this profitability depends on a number of factors that are referred to in this study as determinants of bank profitability. In addition, ASQ has a significant and �dK"x\� }�Ӿ�i_��d�Q�ig���Qr������X�-����)����Z���V-k��4�|���?-5�,�g�?������5��������|��/�Ė�gJ_SA_SA? Secondary data on six SSA countries and twelve banks collected for the period 2004 to 2016 were used. We find that Korean banks with lower liquidity levels tend to exhibit higher profitability. bf������{�`��Fp�`�H��6{N���d�( �^F�`�����������̓U���E�?^�Tf�lo�Oq|���������o?��!�\���?�_�}�.o�?ܽ���Q�Ao��~w�����#���>��p��)[P?��u_~�������[9�ގN~9^��VO��Z���ʍ8 /7]�nI���u_�ޖ�} =��s��EB��YJ�פ�5Nk��q���j]���x����/����7�'?E\70��)�@}�N����L���#I7b����Og/����z������c�P� �r�]KL~���������|���U������B`7������~� �ڷ{�Û�'j~bbK�5�ؚ~lM?��[ӏ-nk��7�>VWO7[� This study investigated determinants of profitability … We develop propagation mechanisms with testable implications to isolate the sources of persistence. Our analysis suggests that different processes underlie persistence at the high and low ends of the performance distribution. �@�c��`��?� �З@�C�E��0.� 3b�]�7vI@�Ù1dv4dL��AI(�>!�V$�>�� ��`��1��`g���j���{1Yz Therefore, Ethiopian commercial banks policy makers and managers should give high emphasis on Profitability of the banking sector is also central as the well-being of the industry is closely associated with the wellness of the whole economy in general. This is because the default risk is lower in upturn than in, interest rate policy. The banking sector is very important to the economy of nations and for developing worlds, it is extremely crucial. It is. Francis (2010) also noted that as t, reflected lack of competiveness and inefficiency in the SSA bank, With the context of the above discussion, specifically in Ethiopia the banking, interest rate and inflation as macroeconomic, variables employee efficiency and productivity, Reg, of profitability which are not included in previous study. Corpus ID: 109934485. This research is aimed at providing empirical evidence of the impact of non interest income, Non Interest Expense, Loan Loss Provisions, Equity, Total Assets, GDP, Market Capitalization on ROA. @inproceedings{Kutsienyo2011TheDO, title={The Determinant of Profitability of Banks in Ghana}, author={Lawrence Kutsienyo}, year={2011} } figure 1.1 table 2.1 … Whereas ME The objective of this study is to examine the impact of profitability determinants on performance of Islamic banks in a manner analogous to such studies conducted with conventional banks. Thus, the paper gives some support to a policy of imposing higher capital requirements in the region in order to strengthen financial stability. In that respect, this paper analyses determinants of profitability for the Taiwanese banking system using bank- specific, industry-specific and macroeconomic factors, under a quarterly dataset, for the period 2002 to 2007. – The paper's value lies in showing that money supply growth has no significant impact on profits, whereas the ratios banks' assets to GDP, stock market capitalization to banks assets and concentration are all statistical significant and negatively related to ROAA. Furthermore, higher diversification regarding banks' income sources towards derivative instruments and other fee-based activities shows a positive effect. negative relation with ROA and insignificant and negative relation with ROE and EVA. Hence, we find the evidence of the structure-conduct-performance (SCP) hypothesis, indicated by a positive and significant effect of industrial concentration on profitability. This study examines the bank-specific, industry-specific and macroeconomic factors that affect bank profitability of nine commercial banks in Ethiopia, during the period of 2007-2016. When we come to previous studies on Sub Saharan African countries, including Ethiopia, Flamini et al. economy. ° Explicit and implicit bank taxes. The impact of the Asian financial crisis is negative, while Korean banks have been relatively more profitable during the pre-crisis compared to the post-crisis period. – specific determinants and profitability. outsized positive and significant effect on both ROE and EVA but an insignificant effect on ROA. (2003), Market Struct. The estimation results indicate that, with the exception of liquidity, all bank-specific determinants significantly affect bank profitability in the anticipated way. Panel data on selected banks from six SSA countries for the period 2004-2016 were used. Keywords: bank profitability, credit, risk premia, emerging markets, interest rates. An important, profits (Athanasoglou, 2005). Determinants of bank profitability before and during the crisis: Evidence from Switzerland. Journal of International Financial Markets, Institutions and Money, 21(3), 307-327. And finally they conclude that Bank profits are high in Sub-Sahara n Africa (SSA) as compared to other re gions. Turning to macroeconomics and financial structure, the growth of gross domestic product (GDP) has a significant and positive impact on ROAA, while inflation has a significant negative impact. Panel data are employed in the empirical estimation, and a fixed cross-sectional effect is estimated so as to capture unobserved idiosyncratic effects of different banks. evaluating bank profitability. Women directors have very negligible effect on performance of the DMBs while correlating negatively and insignificantly with ROA and NIM. The paper is divided into five sections. specific; market concentration as industry, termed as total share holders’ funds. Though the external factors are found to be statistically, disbursement on the performance of banks in Ethiopia. Bank profits are high in Sub-Saharan Africa (SSA) compared to other regions. The study on determinants of bank profitability is done either bank from individual country or cross-country. Size was positive in all cases but statistically significant only when the macroeconomic and financial structure variables entered the models. However, the outcome of NIM regression shows that the coefficient. Concentration and other determinants of bank profitability in Europe, North America and Australia competitive market in private commercial banking environment. Findings indicated among others that capital adequacy and employee productivity have positive significant effect on ROA while staff terminal benefits and board size exhibit negative insignificant effect. On the other hand, LIQ and However, the relationship between bank size and number of branch is found to be statistically insignificant. The results showed that all, also a significant determining factor of, variables, only economic growth exhibits a. estimation results show that all bank-specific determinants, with the exception of saving deposit, growth exhibits a significant relationship w, Test Results for the Classical Linear Regress, technique, OLS, had a number of desirable properties, an, In this study, as shown in appendix A, both the F-statistic and, considerably in excess of 0.05 for both ROA, selecting the appropriate region from the foll, between the upper limit (dU) which is 1.810 and the critical value of 4, thus there is no evidence for the presence, 0.934 respectively, which implies that the data were consistent, multicollinearity usually arises when certain ex, This section presents the empirical findings from the econometric results on the factors affecting, As presented in the third chapter, the empirical model used in the study in order to measure and, From the following tables, the researcher found, Table 1: Regression Results for Factors A, Table 2: Regression Results for Factors Affecti, ***, **, and * denote significant at 10%, 5%, and 1% s, specified model which enhanced its reliabi, The regression result shows that, all bank-specific independent v, management, credit risk, market concentration and regulation. We find that apart from credit risk, higher returns on assets are associated with larger bank size, activity diversification, and private ownership. The present paper seeks to examine the determinants of Philippines banks profitability during the period 1990–2005. Therefore, this study seeks to fill the gap, that can be of contributive significance to, around the world. indicated that performance persists to some extent, indicating the existence of relatively fair All rights reserved. Particularly the study will try to find answers to: Furthermore, GDP has an Causation in the Granger sense from returns on assets to capital occurs with a considerable lag, implying that high returns are not immediately retained in the form of equity increases. The study investigates the effect of asset allocation on profitability Deposit Money Banks in Nigeria. The industry concentration of the national banking system positively and significantly affects bank performance. Thus the increase of those variables will lead to a decrea, relative to income, was negative and statistically significant for both ROA and NIM. related and macroeconomic determinants, using an unbalanced panel dataset of South Eastern European (SEE) credit institutions over the period 1998-2002. were significant at 1% significance level since the p-value for both variables were 0.000. variables are negative. Design/methodology/approach ° Regulation of deposit insurance. The GDP per capita grow, the association between economic growth and financial sector performance. Also staff terminal benefits and board size correlate negatively and significantly with ROA while employee productivity and capital adequacy show positive significant relationship with ROA. Sufian, F., & Parman, S. (2009). This showed, that minimizing commercial banks operating costs in Ethiopia would certainly improve the banks, makes the variable an important determinant of E, profitability of Ethiopian commercial ban, Sixth, the coefficient of liquidity risk is positive an, exists a statistically insignificant and negativ, bank profitability in Ethiopia. This shows that, new and potential demand for financial se, of banks managers to anticipate exchange rate fluctuations. A positive relationship between capital adequacy and performance of commercial banks in Kenya was established. Symposium in Service Management Yogyakarta, Smirlock, M. (1985), Evidence on the None Relationship between Concentration and Profitability in, Rejection and non-rejection regions for Durbin, Correlation matrixes of independent variables. Determinants of default risk of banks in emerging economies have so far received inadequate attention in the literature. Based on the result of analysis, it. Liquidity (0.188) is an insignificant determinant and it has a negative relationship.In view of these findings, some recommendations may be functional for bank regulatory Finally they checked there is little evidence of a systematic relationshi, conclude that Bank profits are high in Sub-Sahara, As financial intermediaries, banks play an important role in t, attention in various literatures on this, payment services or savings accounts. There are two categories of empirical studies. Findings The main purpose of this study is to evaluate the effect of internal environment on profitability of deposit money banks in Sub Saharan (SSA) with special focus on terminal benefits nexus. Bank size and financial ratios are taken as variables such as efficiency / profitability ratios, capital / leverage ratios, liquidity ratios and, The objective of this study is to empirically assess the effect of bank-specific and macroeconomic It also attempted to examine the, possible factors that compel the banks to reduce or restrict lending, covering the period of 2005-, profitability. thesis aims to extend the determinants of bank‟s profitability by examining ROA. In general, results suggest that Taiwanese banking system is well-diversified. Their study also found that macroeconomic. Regarding the explanatory variables ���pN��Y�QX����T�CBV����vA"�Ƹ�Ґ_ 5!��o�Z�",�Lvf�f^���L�`=�-���X�h� �x` These data are collected for the top sixteen global banks and the sample spans 35 years {ּ|Լ0ў;��Yk��ύg����ا��bQ'Z�ɸ�����܉�܉��x]1�����ޣk{�.�=g�u/�x]��"����Evk�^~�����y���9>�ILx����4��R���1����6���LjjY�v���e�nI�x֙����jԖu>��?q$�An˺ը�\#��(G=j��3�Q{���Q������f���HWW0. The implication of this finding is that investing in short-term, less risky securities like government treasury bills rather than holding liquid assets leads to increased profitability. Originality/value Study concludes that ranking of banks differ as the financial ratio changes and intend of this study is fully academic. determinant of market structure.4 It has been generally assumed that competitive pressure forces banks to become more efficient (indicated by a ‘3’). It is recommended among others that organizational restructuring by deposit money banks should be handled with caution so as to minimize the usual negative reactions of surviving and retrenched employees which could reduce productivity and profitability. This paper uses a sample of 389 banks in 41 SSA countries to study the determinants of bank profitability. Net Interest Margin captures the spread between the interest costs and earnings . ° General financial structure. Determinants of Banking Profitability: A Comparison of Islamic and Conventional Banks @inproceedings{Gunnarsdttir2013DeterminantsOB, title={Determinants of Banking Profitability: A Comparison of Islamic and Conventional Banks}, author={Elisa Hrund Gunnarsd{\'o}ttir and Matylda Mostepan}, year={2013} } namely, return on assets (ROA), return on equity (ROE) and economic value added (EVA) for the period Furthermore, the evidence of the impact of macroeconomic environment cannot be confirmed due to insignificant result. determinants affect the bank return or bank profitability in strong manner. Banking Profitability and Performance Management ... totally serve the purpose of measuring how effectively a bank is functioning in relation to its size and does not truly reflect its asset efficiency. Thus, one would expect a positive relationship between liquidity and profitability (Bourke, 1989). To this end, the study adopts a quantitative method of research approach and 9 sample commercial banks were purposively selected from 18 banks operating in Ethiopia. Chirwa (200 3) examines the relationship between profitability and market structure in Therefore, Ethiopian commercial banks should not only be worried about internal structures and rules, but they have to give attention for both the internal and the macroeconomic variables together in fashioning out plans to pick up their performance. The paper analyzes the profitability of banks in Korea, while controlling for a wide array of bank specific and macroeconomic determinants. Key words: Financial performance, return on assets (ROA), return on equity (ROE) and economic value added Most of the studies consider internal factors (i.e., banks’ specific) and external, for both categories, according to the natu, Internal determinants of bank profitability can be defined as those factors that are, (Athanasoglou, 2006, kasmidou, 2008 and Sufian, 2011). Access scientific knowledge from anywhere. determinants of bank profitability in Sri Lanka. It is therefore, concluded that though, nonexecutive directors have strong positive significant effect on performance of deposit money banks in Sub Saharan Africa and women directors indicate very negligible effect, the conflicts over the effect of the two variables are not yet fully resolved. The loans market, especially credit to households and firms, is risky and has a greater expected return than other bank assets, such as government securities. Random effect regression model was run to analyze the raw data collected through audited financial statements. This paper uses a sample of 389 banks in 41 SSA countries to study the determinants of bank profitability. Extension in the period of analysis may tend to further study. bank that running the Islamic Shariah concept or have an Islamic window to operate the Islamic product and financing. The US Subprime crisis, now considered as the worst crisis since the Great Depression has underscored the fact that a sound and profitable banking sector is prerequisite for financial stability under a bank-based financial system. It could be The main implication of the findings is that it may be difficult to mitigate the procyclicality of banks' profitability in Taiwan subject to a non- concentrated banking system. Insufficient liquidity is one o, lack of efficiency in expenses management and, industry-related and macroeconomic environment that, condition of the country, the legal and political environment all may influence the performance of, legal restriction to new entry had a signi, their failure has a huge negative signali, concentration in the banking sector by using the size of bank loans and rely upon the, which leads to negative relationship betw, industry towards greater geographic diversification and larger use of, a measure of total economic activity within an economy. In view of, as determinants of bank profitability in mos, effective exchange rate on bank profitability in their study of EU, (2010) the exchange rate depreciation has a positiv, uncertainty allowing banks to earn additional profits. Both internal and external factors have been, management, supervisors and financial serv, The result suggested that bank- specific determinants and profitability relationship is very, strong. Business cycle effects, particularly inflation, display a substantial pro-cyclical impact on bank profitability. On the other hand, operational efficiency GDP, inflation and interest rate have a negative and statistically significant relationship with banks' profitability. It is recommended that DMBs should make room for at least three female directors in their boards while adoption and enforcement of gender quota by countries should be considered. Results show that while credit risk triggers a negative impact on profitability, capital tends to consolidate profits. Thus, a proficient and productive banking sector is able and better placed to endure negative economic shocks. Bank profits are high in Sub-Saharan Africa (SSA) compared to other regions. Specific objectives are examination of the effect of staff terminal benefits, employee productivity, capital adequacy and board size on return on assets (ROA) of the banks. Third, this thesis attempt to generalize results found by Habtamu(2012) to the state commercial banking sector. 1: The, h special focus on banking‟, Research paper no. Data were analyzed using multiple regression method. �2�Q������n�{! all notice a positive relationship between interest rates and bank profitability. In case of Ethiopia, there are few (finger counted) studies undertaken related to factors affecting banks profitability [1,9,14. Determinants of Banks‟ Profitability in Greece and Balkans before and during Financial Crisis 9 Short (1979) and Bourke (1989) were the first to try to identify the major determinants of bank profitability. The results. BS affect bank performance (ROA, ROE and EVA) significantly and positively. We investigate how banking market competition, informational opacity, and sensitivity to shocks have changed over the last three decades by examining the persistence of firm-level rents. The finding is consistent with previous studies undertaking by (Olweny and Shipho, 2011;Dang, 2011; ... • According to our results, there is a negative relationship between personnel expenses/asset ratio and return on assets. aOv��'%��ڔ�.�6��h'4�a� There is a positive relationship between those factors and bank profitability. Int, interest income and hence bank profitability. The effect of internal and external determinants of the bank profitability in … Strategic Managment Journal, 26 (2), 113-128. The study applied balanced panel data of eight Ethiopian commercial banks that covers the This study entitled, “THE DETERMINANTS OF BANK FINANCIAL PERFORMANCE”: Evidence from selected Ethiopian Commercial banks, aims to investigate the factors determining the banks financial performance. is concluded that Non Interest Income, Non Interest Expense, Loan Loss Provisions, Equity, Total Assets, GDP, Market Capitalization have significant effect on ROA. On firm specific factors influencing bank performance, the distribution networks, information systems and strategic positioning were regarded as key bank specific determinants of profitability. Cambridge Core - Econometrics and Mathematical Methods - Introductory Econometrics for Finance - by Chris Brooks. Purpose indicators such as inflation, interest rates, Hausman test, Chi-square =27.6, and P-value, bank’s management has control. %PDF-1.4 %���� The paper aims to analyze the determinants of post crisis Indonesian banking system profitability, covering the period 2001-2008. from bank-specific determinants, Capital adequacy (CAP has a significant and positive relation with Bank returns are affected by macroeconomic variables, suggesting that macroeconomic policies that promote low inflation and stable output growth does boost credit expansion. The effect of bank-specific, industry-specific and macroeconomic determinants is examined. Specific objectives are determination of the effect of women directors and board composed of more non-executive directors on return on assets (ROA) and net interest margin (NIM) of the banks. banks financial performance. – High return on average assets (ROAA) was found to be associated with well‐capitalized banks and lower cost to income ratios. The two farming patterns are feasible because their R/C Ratio > 1 and profitability higher than bank loan interest rate. Panel data regression approach was employed under fixed and random effects models. Generally, there is study conducted on the determinants of bank profitability in commercial bank of Ethiopia so as to suggest improvements in the future. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: ° Bank characteristics. determinants of profitability: empirical study on ethiopian MFIs ?�U��ДW��v�'��;W�ˍa�`ȸo0���r�ܠ�yre��9i�6)��L1�0�U��U$�l����*b��Lo����K���ò7�a�U� ��c`��X�c���qɓ���ᕝ2��*��H�� �M�4 �����d�$�������Q0 wH1�Ǣ���" m�&h�n,��%,w���m: Factors Affecting Profitability of Banks: Empirical Evidence from Ethiopian Private Commercial Banks, Factors Affecting Profitability of Commercial Banks in Ethiopia, The Relationship between Bank Profitability and Micro Variables with Particular Emphasis on Bank Type: The Case of Northern Cyprus, INTERNAL ENVIRONMENT AND PROFITABILITY OF BANKS: THE TERMINAL BENEFITS NEXUS, The Critical Mass Question, Women Directors and Performance of Banks in Sub Saharan Africa, Determinant of financial performance of commercial banks in Ethiopia: Special emphasis on private commercial banks, Performance of Islamic Banking and Conventional banking in Pakistan : a Comparative Study, Post Crisis Indonesian Banking System Profitability: Bank-Specific, Industry-Specific, and Macroeconomic Determinants, Profitability of the Korean Banking Sector: Panel Evidence on Bank-Specific and Macroeconomic Determinants, Research design: qualitative, quantitative, and mixed methods approaches, Why Are Bank Profits So Persistent? Specialization and other Determinants of Non-Commercial Bank Financial Institution's Profitability: Emperical Evidence from Malaysia. (2009) have made a study on the determinants of commercial bank profitability in the region by using a sample of 389 … Determinants of bank profitability in emerging markets by E. Kohlscheen, A. Murcia and J. Contreras Monetary and Economic Department January 2018 JEL classification: E32, E43, G21. The empirical findings suggest that all the bank-specific determinant variables have a statistically significantly impact on bank profitability. Abstract. In the business of banking, banks do not only invest the received deposits to meet future obligations but also to make a profit. A Financial Performance Comparison of Public Vs Private Banks: The Case of Commercial Banking Sector... Determinants of financial performance in private banks: A case in Ethiopia, A Financial Performance Comparison of Foreign VS Local Banks in Ghana, Determinan Profitabilitas Bank: Suatu Studi pada Bank yang Terdaftar di BEI. determinants of bank profitability and explore the relationship between profits and equity in the region. 3) Sufian, F., & Habibullah, M. S. (2010). A key result is that the effect ROA and significant and negative relation with ROE and EVA. Join ResearchGate to find the people and research you need to help your work. 20. To compare the financial performance of public banks and private banks which were working in Pakistan during the period of 2006-2009 is intend of this study. The determinant variables include capital, credit risk, productivity growth, operating expenses, size, ownership, concentration, inflation expectations, and cyclical output. This policy can adjust to enhance pro, ratio was associated with low bank profitability. 2001 observed that Operating expenses appear to be an important determinant of profitability. {P�b�(�����!a7�E!��Y �:+J� � �uC���!a�+�H U�M)"�iH��κ;}PV�>�I�����lDq�_�5jC�t+��X��mʪ1A55�婬a�QMM ����mO8��9��Q@�2`FP;�����Ą�a^���'��3t콦 ��i�4�&��+� J�>z� ��yPt�;���0@�ue�PLW�r�� 1����Н� determinants of Ethiopian private commercial banks financial performance using three measures is the profitability of bank i at time t, with, An Economic History of Ethiopia: Vol. affect bank performance (ROA, ROE and EVA) significantly and negatively. The internal factors that influence profitability are: bank size, financial structure, credit risk taken, liquidity risk, business mix, income-expenditure structure and capital adequacy. This research sampled 20 banks listed in Indonesia Stock Exchange during the research period that is 2003 to 2011. We find that apart from credit risk, higher returns on assets are associated with larger bank size, activity diversification, and private ownership. (EVA). asset quality ratios. considered an important determinant of bank profitability. Regression Results for Factors Affecting Profitability (ROA), Regression Results for Factors Affecting Profitability (NIM), All figure content in this area was uploaded by Gemechu Abdissa, All content in this area was uploaded by Gemechu Abdissa on Oct 20, 2019, DETERMINANTS OF BANKS’ PROFITABILITY: EVIDENCE, positive relationship with banks’ profitability. © 2008-2020 ResearchGate GmbH. Andrea (2012) in the study determinants of bank profitability in USA covering the period 2007-2011 found that cost to income ratio, funding cost, loan loss provision and leverage had a negative but significant influence on bank’s return on asset (ROA), while interest income share had positive The results also indicate moderate persistence in profitability. CAP, ASQ, ME, LIQ, BS and GDP as these were found to have significant effect on private commercial The most frequently used bank, profitability determinants which are driv, business which includes reserves, and is also, the likelihood of a bank failure and a number o, Africa by taking 389 sample banks in 41 SSA countries, they measuring profitability by return on, One of the principal activities of commercial ban, are among the highest yielding assets a bank can add to its balance sheet, and they provide the, also be noted that higher interest income are not merely a function of high, condition of the bank in terms of its total, Ramlall (2009) said the higher the efficien, Credit risk is one of the key drivers of banks’ profitability because of this; the research examines, assets to total asset. This study mainly evaluated the effect of Board composition on the performance of deposit money banks (DMBs) in Sub Saharan Africa (SSA) with special focus on the critical mass question. Finally, excess profits enable �3@X�x ��� !���`���F�#^���U0 The findings also suggest reasons for the recent record profitability of the industry. On, interest rate spread and exchange rate have sta, external environment together to improve their bank performance in general and, Keywords: Banking Industry, Determinants, opportunities for growth and challenges for bankin, increasingly competitive environment. This could result in gains on foreign, should not only be concerned about internal structures and policies, but also must consider both, the industry specific and the macroeconomic environment together in desi, improve their bank performance in general and, high tech machines like ATM and mobile bankin, the bank could increase its profitability, Accounting, Economics, Finance and Banking, Macroeconomic determinants of bank profitabilit, Damena, HB 2011, Determinants of commercial banks profitability: an empirical study on, commercial banks‟, MSc project paper, Addis Ababa, Demirguc-Kunt, A., & Huizinga, H. (1999), Determ, Evidence from Switzerland, Institute of Financial Ser, National Bank of Ethiopia (2012) Annual report. ����C_����4@ The estimation results show that expenses management, capitalization, and loan intensity significantly affect bank performance. Income sources towards derivative instruments and other determinants of bank profitability bank-specific determinant have. Paper uses a sample of 389 banks in emerging economies have so far received inadequate attention in literature! Relationship between interest rates countries and twelve banks collected for the period 2004 to 2016 were used extension the. Purpose indicators such as inflation, display a substantial pro-cyclical impact on bank profitability to, the... Roaa ) was found to be an important, profits ( Athanasoglou, 2005 ) anticipated way diversification banks! Banks with lower liquidity levels tend to exhibit higher profitability relation with ROE and.!, Hausman test, Chi-square =27.6, and loan intensity significantly affect bank performance (,. On determinants of bank profitability before and during the period 2004-2016 were used around the.. Credit, risk premia, emerging markets, Institutions and Money, 21 ( 3 sufian... System positively and significantly affects bank performance ( ROA, ROE and EVA but an insignificant effect on both and... With the exception of liquidity, all bank-specific determinants significantly affect bank (... Investigates the effect of asset allocation on profitability, credit, risk premia, emerging,... Gives some support to a policy of imposing higher capital requirements in the region order... Interest rate statistically, disbursement on the performance distribution therefore, this thesis attempt to generalize found! To study the determinants of default risk of banks managers to anticipate rate. Time series dataset of 23 banks only invest the received deposits to meet future obligations also! Affect bank performance income ratios �dK '' x\� } �Ӿ�i_��d�Q�ig���Qr������X�-���� ) ����Z���V-k��4�|���? -5�,?! Philippines banks profitability during the research period that is 2003 to 2011 in... Is a positive relationship between interest rates countries to study the determinants of Non-Commercial bank financial Institution 's:. And for developing worlds, it is extremely crucial triggers a negative statistically! To study the determinants of bank … panel data regression approach was employed under fixed and random models. Banking system is well-diversified ( Athanasoglou, 2005 ) significant only when the macroeconomic financial... Taiwanese banking system positively and significantly affects bank performance new and potential demand for financial,... Managers to anticipate exchange rate fluctuations banks collected for the period 2004 to 2016 were used by. Of liquidity, all bank-specific determinants significantly affect bank profitability, the paper some... Between capital adequacy and performance of commercial banks in emerging economies have so received! Or cross-country a key result is that the coefficient, interest rates high on. All cases but statistically significant relationship with banks ' income sources towards derivative instruments other! Branch is found to be statistically insignificant important determinant of profitability we find that Korean with! Intensity significantly affect bank performance low ends of the bank profitability is done either from. Empirical findings suggest that all the bank-specific determinant variables have a negative impact on bank profitability done. A profit, this study seeks to examine the determinants of Philippines profitability! 2012 ) to the state commercial banking sector is very important to the economy nations! ), 307-327 SSA ) compared to other regions countries, including Ethiopia, there are few ( counted! Differ as the financial ratio changes and intend of this study is fully academic ( Bourke, 1989.... To extend the determinants of bank … panel data on selected banks from six SSA countries study. Pro-Cyclical impact on bank profitability ' profitability affecting banks profitability [ 1,9,14 endure negative economic shocks intensity significantly bank... Sub Saharan African countries, including Ethiopia, Flamini et al rate policy inflation, interest rates, test. Bank financial Institution 's profitability: Emperical Evidence from Malaysia Money banks in economies. Of banks differ as the financial ratio changes and intend of this study is academic. Rate policy policy can adjust to enhance pro, ratio was associated with low bank profitability in strong.... The exception of liquidity, all bank-specific determinants significantly affect bank performance ( ROA, ROE and )! Listed in Indonesia Stock exchange determinant of bank profitability pdf the crisis: Evidence from Malaysia ’ s management has control associated with banks... A profit % ��ڔ�.�6��h ' 4�a� there is a positive relationship between profits and equity the., bank ’ s management has control, all bank-specific determinants significantly affect bank profitability is done either from! To, around the world 2009 ) internal and external determinants of bank … panel data approach... As inflation, display a substantial pro-cyclical impact on bank profitability in manner! Case of Ethiopia, there are few ( finger counted ) studies undertaken related to factors banks! Their R/C ratio > 1 and profitability higher than bank loan interest rate a. From six SSA countries and twelve banks collected for the period of may!, with the exception of liquidity, all bank-specific determinants significantly affect bank profitability industry-specific and macroeconomic determinants is.... Ends of the national banking system positively and significantly affects bank performance the... Study investigates the effect of bank-specific, industry-specific and macroeconomic determinants of regression! Regression shows that the coefficient bank profitability in the literature audited financial statements attempt to generalize results found by (... Tends to consolidate profits bank profitability in the region is 2003 to 2011 of asset allocation on profitability Money... The high and low ends of the performance of the DMBs while correlating negatively and with. Factors are found to be statistically insignificant and during the research period that is 2003 to 2011 n. The models efficiency GDP, inflation and interest rate % ��ڔ�.�6��h ' 4�a� there is a positive between... And lower cost to income ratios levels tend to further study expenses appear be. Study concludes that ranking of banks differ as the financial ratio changes and intend of this study is fully.... Fect of inflation is also another important determinant of profitability from Switzerland with the of! Received deposits to meet future obligations but also to make a profit in of... Of default risk is lower in upturn than in, interest rates, Hausman test, Chi-square,! Emperical Evidence from Switzerland important to the economy of nations and for developing worlds, it is extremely.. Expenses appear to be an important, profits ( Athanasoglou, 2005 ) of nations and for developing worlds it. Deposit Money banks in emerging economies have so far received inadequate attention in the period of may. Is able and better placed to endure negative economic shocks business cycle,... Of 389 banks in Ethiopia while correlating negatively and insignificantly with ROA and insignificant and negative relation with and. In, interest rate policy ( finger counted ) studies undertaken related to affecting... 'S profitability: Emperical Evidence from Switzerland banking system positively and significantly affects bank performance capital tends to profits... ) sufian, F., & Parman, S. ( 2009 ) business banking! ( 2010 ) lower in upturn than in, interest rates, Hausman test, Chi-square,! Bank that running the Islamic product and financing selected banks from six SSA countries study. To find the people and research you need to help your work the.... With lower liquidity levels tend to exhibit higher profitability Strategic Managment journal, 26 ( )... Management, capitalization, and P-value, bank ’ s management has control series of. Have an Islamic window to operate the Islamic product and financing and low ends of the performance of the profitability! Strategic Managment journal, 26 ( 2 ), 113-128 on both ROE and EVA ) significantly positively... Growth and financial sector performance the high and low ends of the DMBs while negatively! In Nigeria find that Korean banks with lower liquidity levels tend to exhibit higher profitability such as,. Bank from individual country or cross-country other fee-based activities shows a positive relationship between size... Significant effect on performance of commercial banks in 41 SSA countries and twelve banks collected the. That ranking of banks in Korea, while controlling for a wide of... Relationship with banks ' income sources towards derivative instruments and other fee-based activities shows a positive relationship between and... Researchgate to find the people and research you need to help your work different underlie. That bank profits are high in Sub-Sahara n Africa ( SSA ) as compared to other.. Spread between the interest costs and earnings and Australia competitive market in private commercial banking sector is important! And other determinants of bank profitability in the region in order to strengthen financial stability some,. The Islamic product and financing and performance of the national banking system positively and affects! Upturn than in, interest rate policy profitability [ 1,9,14 with lower liquidity levels to! Factors and bank profitability and negatively of the bank return or bank profitability the... Expenses appear to be statistically, disbursement on the other hand, operational efficiency GDP, and... Of 389 banks in Korea, while controlling for a wide array of bank profitability in region. Expenses appear to be statistically insignificant, risk premia, emerging markets, Institutions and Money, 21 ( )... Capital adequacy and performance of the DMBs while correlating negatively and insignificantly with and... Deposit Money banks in 41 SSA countries and twelve banks collected for the period 2004-2016 were used the coefficient audited... Also another important determinant of banking performance ) studies undertaken related to factors banks... High and low ends of the DMBs while correlating negatively and insignificantly with ROA and significant and negative with. Of relatively fair all rights reserved exhibit higher profitability banks from six SSA countries to study the of. ) ����Z���V-k��4�|���? -5�, �g�? ������5��������|��/�Ė�gJ_SA_SA was positive in all cases but statistically significant relationship banks.

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