scholarly journals Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Empirical Evidence from Nigeria

2017 ◽  
Vol 6 (1) ◽  
pp. 25 ◽  
Author(s):  
Oluwaseyi Ebenezer Olalere ◽  
Wan Ahmad Bin Omar ◽  
Syahida Kamil
Keyword(s):  
Developing Economies ◽  
Operating Cost ◽  
Capital Adequacy ◽  
Data Set ◽  
Bank Profitability ◽  
Financial Reports ◽  
Return On Equity ◽  
Empirical Results ◽  
Developed Economies ◽  
Macroeconomic Determinants

The study examines the bank-specific and macroeconomic determinants of banks profitability in Nigeria analyzing audited financial reports of selected sixteen (16) commercial banks over the period of 2010 to 2015 making up to 96 observations. The study identified that existing studies are sketchy in developing economies even though many studies have emerge in developed economies. The bank profitability is measured by return on assets and return on equity as function of bank-specific and macroeconomic determinants. Using the balanced panel data set, the empirical results of the study shows that capital adequacy and liquidity have a positive and significant effect on bank profitability. However, efficiency ratio have a negative and significant effect on bank profitability. With regards to macroeconomic variable, GDP growth also have a positive and significant impact on banks profitability. The empirical results of the study suggested that banks can improve their profitability through increasing capital and liquidity, decreasing operating cost with conscious effort to maintain transparency in their operations. In addition, a good economic environment for financial institutions foster increase in bank profitability. Hence, the study recommends that further studies can expand the scope while extending to other industries as well.

scholarly journals Determinants of Capital Adequacy of Nigerian Banks

Market Forces ◽  
2020 ◽  
Vol 15 (1) ◽  
Author(s):  
Sanyaolu Wasiu Abiodun ◽  
Alao Adeniyi Abdul-Azeez ◽  
Yunusa Lateef Adewale
Keyword(s):  
Management Practices ◽  
Developing Economies ◽  
Banking System ◽  
Capital Adequacy ◽  
Data Set ◽  
Nonperforming Loans ◽  
Flow Of Funds ◽  
Economic Progress ◽  
The Stability ◽  
Macroeconomic Determinants

A reliable banking system in developing economies like Nigeria is vital for economic progress as it facilitates the flow of funds to productive investment sectors. The capital adequacy requirement of banks is a crucial feature of the stability of the banks globally. Because of its importance, we have examined the antecedents to capital adequacy. We have used the data set of ten leading banks of Nigeria from 2007 to 2017. Our results indicate that ROA and loan to total assets are significantly associated with capital adequacy. However, we found that nonperforming loans and size are negatively associated with the capital adequacy. Our results do not support the association between macroeconomics variables and capital adequacy. Therefore, we recommend that all banking entities should reserve sufficient cash and cash equivalents as a percentage of deposits and apply aggressive risk management practices to reduce the magnitude of nonperforming loans. This study was restricted to one country. Future studies can be carried out in other countries. A comparative data set of more than one country may bring further insight into the phenomenonKeywords: Capital adequacy ratio, banks-specific determinants, macroeconomic determinants, Nigeria.

scholarly journals Bank-specific, Industry-specific and Macroeconomic Determinants of Banks Profitability: Empirical Evidence from Tanzania

2016 ◽  
Vol 3 (2) ◽  
pp. 100 ◽  
Author(s):  
Saganga Mussa Kapaya ◽  
Gwahula Raphael
Keyword(s):  
Regression Model ◽  
Fixed Effects ◽  
Capital Adequacy ◽  
Market Development ◽  
Return On Equity ◽  
Net Interest Margin ◽  
Financial Market Development ◽  
Fixed Effects Regression ◽  
Macroeconomic Determinants ◽  
Loan Losses

The study analyzed effects of bank-specific, industry-specific and macroeconomic determinants on banks profitability. It used a maximum of 350 firm-years, from 52 banks from 1998 to 2010 in Tanzania. It did proxy profitability using return on asset (ROA), return on equity (ROE) and net interest margin (NIM). The static fixed effects regression model indicated that; credit facilities (CFA), capital adequacy (TEA), credit risk (CFR), diversification ratio (DIV), bank risk (BAR) and financial market development (MCAd) were significantly influencing ROA. The dynamic fixed effects regression model indicated that lagged ROA, TEA, loan losses provisions (PLT) and BAR, were significantly influencing ROA.

COMPETITION, RISK AND PROFITABILITY IN BANKING SYSTEM — EVIDENCE FROM VIETNAM

2020 ◽  
Vol 65 (06) ◽  
pp. 1491-1505
Author(s):  
THI HIEN NGUYEN ◽  
HA GIANG TRAN
Keyword(s):  
Information Technology ◽  
Risk Reduction ◽  
Commercial Banks ◽  
Banking System ◽  
Bank Competition ◽  
Competition Index ◽  
Data Set ◽  
Bank Profitability ◽  
Empirical Results ◽  
The Impact

The development in information technology results in a significant increase in bank competition. The question of whether increased competition improves bank profitability and risk reduction is important in many aspects. This paper analyzes the impact of competition on profitability and risk in the context of Vietnam using OLS estimator on data set of 37 Vietnamese commercial banks. The main results present that banks with a higher competition index tend to have higher profitability which is measured by ROE and NIM. In addition, our empirical results also show that banks tend to take on more risk when facing increased competition.

scholarly journals The Impact of Non-Performing Loans, Return on Assets, Return on Equity, and Loan to Deposit Ratios on Minimum Capital Adequacy Requirement Based on Commercial Banks for Business Activities (BUKU) I 2015-2020

2021 ◽  
Vol 6 (6) ◽  
pp. 42-46
Author(s):  
Rano Rahadian ◽  
Dudi Permana
Keyword(s):  
Panel Data ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Financial Reports ◽  
Return On Equity ◽  
Minimum Capital ◽  
The Impact

The purpose of this research is to gain an understanding of The Impact of Non-Performing Loans, Return on Assets, Return on Equity, and Loan to Deposit Ratios on Minimum Capital Adequacy Requirement Based on Commercial Banks for Business Activities (BUKU) I 2015-2020. The data of this research is obtained from financial reports published by each bank in 2015 to 2020 period. This research uses panel data processed using EViews software version 9.0. The results show that NPL negatively and insignificantly affects CAR. ROA gives positive and insignificant impacts toward CAR, while ROE causes negative and insignificant effects on CAR. In addition, there is positive and significant impacts on CAR caused by LDR.

CAMEL RATIO ON PROFITABILITY BANKING PERFORMANCE (MALAYSIA VERSUS INDONESIA)

2017 ◽  
Vol 3 (1) ◽  
pp. 30-39
Author(s):  
Maryam binti Badrul Munir ◽  
Ummi Salwa Ahmad Bustamam
Keyword(s):  
Capital Adequacy ◽  
Return On Assets ◽  
Comparative Performance ◽  
Bank Profitability ◽  
Return On Equity ◽  
Short Period ◽  
Equity Ratio ◽  
Asset Quality ◽  
Descriptive Method ◽  
Interest Expense

Purpose: This research analyzed about profitability banks performance based on the CAMEL (Capital Adequacy, Asset Quality, Management, Earnings and Liquidity) on the Bank's profitability. Capital adequacy measured by debt equity ratio (DER) and non-performing loans (NPL), asset quality measured by return on assets (ROA), management will be measured by cost per income, earnings measured by return on equity (ROE) and liquidity measured by interest expense and deposit.Methodology: The samples were 114 samples (from 10 bank in Malaysia and 9 bank in Indonesia) since 2010-2015. This analysis used descriptive method and multiple regression analysis, the result of this research indicated that banking profitability have a good performance based on CAMEL analysis.Findings: From the results of regression, the CAMEL analysis has a significant relationship to the bank profitabilityPractical Implications: The study demonstrated the use of CAMEL analysis to measure bank profitability. If bank performance declining through the CAMEL analysis so the Bank should make a decision to make a better performance changes of banking.Social Implications: This study was about the importance of camel analysis measuring the performance banking. CAMEL analysis detected the decrease in performance in any business sector.Originality/Value: This analysis adapted and adopted the study conducted by Sahut and Mili(2011), but this study focusedonly on the comparative performance between conventional and Islamic banking between Malaysia and Indonesia.Research Limitations/Implications: Comparison of CAMEL analysis focused on two countries between Malaysia and Indonesia (it also involves the comparative analysis of conventional and Islamic bank) to gain the profitabilityof banking, ROI with short period since 2010 until 2015

The Impact of Credit Risk on Performance: A Case of South African Commercial Banks

2020 ◽  
pp. 097215092096992
Author(s):  
Babatunde Lawrence ◽  
Mishelle Doorasamy ◽  
Prince Sarpong
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Gender Diversity ◽  
Capital Adequacy ◽  
Financial Reports ◽  
Return On Equity ◽  
Leverage Ratio ◽  
Small Banks ◽  
Board Gender Diversity ◽  
The Impact

The objective of the study was to comparatively assess the impact of credit risk on the performance of big and small banks in South Africa. Data from audited financial reports of 14 commercial banks were obtained and divided into two panel data sets and analysed using the R-Studio software version 3.5.1 to assess the impact of capital adequacy ratio (CAR), non-performing loan to gross loan (NPLGL), loan-to-deposit ratio (LTDR), leverage ratio (LR), board gender diversity (BGD), with bank size (total asset) and AGE as control variables, on performance, (return on asset [ROA] and return on equity [ROE]). The findings of the study revealed that non-performing loan (NPL), CAR, LR, LTDR and age of banks all have significant and greater impact on performance, as measured by ROA, of small banks when compared with big banks. Surprisingly, NPL was revealed to have a lesser impact on the ROE of small banks as compared to the ROE of big banks but showed no impact on the ROA of big banks during the period of 2008–2017.

scholarly journals Bank Specific Determinants of Bank Profitability in Indonesia for The Period 2008-2019

2020 ◽  
Vol 3 (2) ◽  
pp. 13-21
Author(s):  
Muhammad Luthfi Utomo ◽  
Achmad Herlanto Anggono
Keyword(s):  
Fixed Effects ◽  
Low Cost ◽  
Operating Cost ◽  
Third Party ◽  
Fixed Effects Model ◽  
Return On Assets ◽  
Bank Profitability ◽  
Return On Equity ◽  
Operating Income ◽  
Panel Data Regression

Banks have an important role in the economy and are the significant driver of economic growth for its financing to many industries in the economy. Thus, banks need to be maintained profitable to keep operating and avoid the major impact of bank failure. This study attempts to know the relationship between bank-specific variables of Liquid Assets to Total Assets (LATA), Non-performing Loans to Total Loans (NPLTL), Operating Cost to Operating Income (OCOI), Third-party funds to Total Assets (TPFTA), and Core Capital Tier 1 to Total Assets (TIER1TA) toward bank profitability by using Return on Assets (ROA) and Return on Equity (ROE) as the measure. The data used are 7 banks of BUKU 4 category for the period 2008-2019 in quarterly frequency. The research uses panel data regression of the fixed-effects model. The findings show that LATA is significant negative to ROA and ROE, NPLTL is significant positive to ROA and ROE, OCOI is significant negative to ROA and ROE, TPFTA is significant positive to ROA and ROE, and TIER1TA is significant negative toward ROA and ROE. Banks should maintain their operating expense low, increase their interest income, and getting a source of funds with low cost to get more profit.

scholarly journals BANK SPECIFIC AND MACRO-ECONOMIC DETERMINANTS OF THE UNITED ARAB EMIRATES COMMERCIAL BANKS PROFITABILITY: A PANEL DATA ANALYSIS

2020 ◽  
Vol 8 (10) ◽  
pp. 661-677
Author(s):  
Jamil Salem Al Zaidanin ◽  
Keyword(s):  
United Arab Emirates ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Bank Profitability ◽  
Macroeconomic Factors ◽  
Economic Determinants ◽  
Return On Equity ◽  
Specific Factors ◽  
Bank Specific Factors

This study attempts to identify the Bank Specific and Macro-economic Determinants of The United Arab Emirates Commercial Banks Profitability measured by Return on Assets, Return on Equity and Net Interest Margin. The study uses bank-specificand microeconomic factors as independentvariables. The bank-specific factors include bank size, capital adequacy, assets quality, liquidity, deposits, diversification ,business mix, and efficiency, while the macroeconomic factors include real Gross Domestic Product growth, Inflation Rate, and Real Interest Rate.Regression models were used to relate bank profitability ratios to the independent variables built on panel data for the period 2013-2019 of sixteen commercial banks operating in the United Arab Emirates.The results of the study show thatassetsize, liquidity, off-balance sheet activities, and diversification have significant impact on profitability as measured by theNet Interest Margin. In addition, loans under follow-up to total loans, and managerial efficiency are found to behighlysignificantvariables of profitability in the context of the United Arab Emirates commercial banks as measured by Return on Assets and Return on Equity. Furthermore, diversification has a significant impact on profitability as measured by Return on Assets. The remaining bank-specific factors (capital adequacy, loans to total assets, liquidity, deposits to assets ratio, and operating expenses to total assets ratio) and macroeconomic factors have no significant effect on bank profitability. The results of the study suggest that banks can improve their profitability through maintaining high operating income, decreasing the size of non-performing loans, full utilization of liquid assets, more concentration on the main activities, efficiently managing their operating expenses, and taking advantage of the Gross Domestic Productgrowth , inflation and Interest Rate changes to improve the banks performance and profitability. In addition, it is recommended to make further studies on the banks performance with an expanded scope which is tobe extended to other industries.

scholarly journals Antecedents of Financial Performance of Banking Sector: Panel Analysis of Islamic, Conventional and Mix Banks in Pakistan

2015 ◽  
Vol 1 (1) ◽  
pp. 9-30 ◽  
Author(s):  
Irum Saba ◽  
Rabia Kibriya ◽  
Rehana Kouser
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Fixed Effect Model ◽  
Least Square ◽  
Panel Regression ◽  
Internal Factors ◽  
Bank Profitability ◽  
Return On Equity ◽  
Asset Quality ◽  
Macroeconomic Determinants

Objective: This paper analyzes bank-specific, industry-specific and macroeconomic determinants of bank profitability on the sample of 25 banks, 161 observations on the Pakistani banking system in the period between 2006 and 2012. Our dependent variables include Return on Equity, Return on Assets and Earning per Share and independent variables consist of 'bank-specific determinants', industry-specific determinants', and 'macroeconomic determinants'. State Bank of Pakistan provides the data for internal factors on a yearly basis. Methodology: Different statistical techniques are used step by step to empirically test the relationship between the variables and to draw conclusions from the results of the study. Firstly, to analyze the features of the profitability determinants descriptive statistics are used. Secondly, we examine the causal relationship between bank-specific, industry specific, macroeconomic variables and profitability variables, Pearson's coefficient of correlation is used.  Panel data are used in this study so the technique used for regression is a panel regression technique which includes the pooled Ordinary Least Square, Random Effects Model and Fixed Effect Model. Hausman test is used to analyze that which technique for panel regression is more suitable for study. Results: According to the obtained results, among internal factors of bank profitability, firm size are the most important factor. Profitability is influenced by liquidity, asset quality and leverage condition of the banks. Regarding the external variables, inflation and interest rate show significant effect on bank profitability. Islamic banks show significant positive relationship with commercial banks.

scholarly journals Determinants of banks’ profitability – the case of Jordan

2016 ◽  
Vol 13 (1) ◽  
pp. 84-91 ◽  
Author(s):  
Ali Sulieman Alshatti
Keyword(s):  
Panel Data ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Data Set ◽  
Return On Equity

This paper seeks at investigating the critical determinants that affected the profitability of the commercial banks in Jordan by applying a balanced panel data set of these banks. So that it seeks to identify the significant bank-specific variables, by comprising 130 observations of thirteen banks over the years (2005-2014). A measurement of banks’ profitability is the return on assets (ROA) and the return on equity (ROE). The results indicate that the variables of capital adequacy, capital and leverage positively effect on the banks’ profitability, and the variable of assets quality negatively effects on the banks’ profitability. Results also indicate that rising bank’s profitability in Jordan is associated with well-capitalized banks, accompanied by high capital adequacy

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