scholarly journals Determinants of bank profitability during oil price decline

2022 ◽  
Vol 10 (8) ◽  
pp. 200-217
Author(s):  
Laila Saif Hamed Al-Harthy ◽  
Revenio Jalagat, Jr. ◽  
Karima Sayari
Keyword(s):  
Significant Relationship ◽  
Pearson Correlation ◽  
Oil Price ◽  
Bank Profitability ◽  
Macroeconomic Factors ◽  
Return On Equity ◽  
Price Decline ◽  
Net Profit ◽  
Specific Factors ◽  
Bank Specific Factors

This study examines the influence of macroeconomic factors, namely Inflation, Gross Domestic Production (G.D.P.) and changes in oil price and Bank-Specific Factors such as capital, asset size, liquidity risk, loan and deposit on bank profitability as measured by return on equity (R.O.E.) and net profit ratio (NPR) during the period of oil price decline, 2013-2017. The top 7 commercial banks were chosen as a sample of the study based on the availability of the data and the possible influence it can contribute to representing Oman's banking industry. The quantitative approach utilized appropriate statistical tools to analyze and interpret the secondary data gathered, including descriptive statistics, panel regression, Pearson correlation, and correlation matrix. Key findings of the study revealed no significant relationship between macroeconomic factors and the return on equity. There is also no significant relationship between macroeconomic factors and the net profit ratio. On the other hand, bank-specific factors significantly correlate return on equity and the net profit ratio. The study's findings contribute to the bank's management, economic policymakers, a research body, and academia in distinguishing the best indicator for a bank's profitability influenced by macroeconomic and bank-specific factors.

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 The Impact of Specific Banking, Industrial and Macroeconomic Factors on Bank Profitability: Evidence from the Albanian Banking System

2019 ◽  
Vol 9 (2) ◽  
pp. 182
Author(s):  
Gazmend Nure
Keyword(s):  
Banking System ◽  
Short Term ◽  
Bank Profitability ◽  
Macroeconomic Factors ◽  
Return On Equity ◽  
Specific Factors ◽  
The Impact ◽  
Research Studies ◽  
Bank Profits

This research studies the factors that affect the profitability of the banking system in Albania during the period 2012-2017.The specific factors taken in the study are divided into two groups: the specific banking factors (internal), and the macroeconomic factors. The dependent variable used in the study, to measure Bank Profits, is Return on Equity (ROE). The empirical findings show that, when ROE is used as a dependent variable, all bank specific variables are negatively and significantly related to profitability. That being said, there is the exception of the liquidity factor (Liquid assets over short term liabilities) and bank size which has a positive.

scholarly journals Factors affecting the liquidity of commercial banks in India: a longitudinal analysis

2019 ◽  
Vol 14 (4) ◽  
pp. 78-88 ◽  
Author(s):  
Shyam Bhati ◽  
Anura De Zoysa ◽  
Wisuttorn Jitaree
Keyword(s):  
Significant Relationship ◽  
Random Effect ◽  
Consumer Price Index ◽  
Macroeconomic Factors ◽  
Return On Equity ◽  
Factors Affecting ◽  
Regulatory Factors ◽  
Long Term Effect ◽  
Indian Banks ◽  
Reserve Ratio

This paper examines the long-term effect of various regulatory, bank-specific and macroeconomic factors on the determination of liquidity in Indian banks. For this purpose, the study uses a random effect panel data regression model and tests it with data on Indian banks for 21 years, covering the period from 1996 to 2016. The model considers the effect of regulatory factors, cash reserve ratio, and statutory liquidity, and incorporates four different liquidity ratios specific to the Indian banking scenario. The results of the analysis show contrasting relationships between the independent variables and the dependent variables measured by four liquidity ratios.It is interesting to note that Indian banks rely more on asset-based liquidity and less on liability-based liquidity. More specifically, the most important liquidity ratio of L1 (liquid assets to total assets ratio) showed a significant relationship with macroeconomic variables of discount rates, call rates, foreign exchange reserve, exchange rate with US dollar, consumer price index and gross domestic product. L1 also showed a significant relationship with bank-specific variables of capital to total assets and bank size. However, the regulatory factors of cash reserve ratio and profitability determined by return on equity (ROE) and non-performing assets were not found to have any effect on liquidity of Indian banks.

scholarly journals Analisi Regresi Data Panel pada Kinerja Perbankan di Indonesia

2020 ◽  
Vol 5 (2) ◽  
pp. 199-208
Author(s):  
Keti Purnamasari
Keyword(s):  
Market Structure ◽  
Market Share ◽  
Market Concentration ◽  
Capital Adequacy ◽  
Return On Equity ◽  
Net Interest Margin ◽  
Specific Factors ◽  
Bank Specific Factors ◽  
Size Efficiency ◽  
Interest Margin

Abstract- The determinants of bank performance can be grouped into three groups, namely; 1) bank specific factors related to management decisions and policy objectives, 2) industry factors related to industrial structure and market growth, and 3) macroeconomic factors that reflect the economic conditions in which the bank operates. This study analyzes the effect of bank-specific factors and industry factors on banking performance using panel data regression analysis on a sample of 39 Indonesian Commercial Banks during the 2015-2019 period. Bank specific factors consist of bank size, efficiency, and capital adequacy, while the industrial factor in this study is the market structure which includes market concentration and market share. Banking performance is measured by Return on Equity and Net Interest Margin. The results of this study indicate that bank size and efficiency (BOPO) has a negative and significant effect on banking performance. Capital adequacy and market concentration have no effect on banking performance. Meanwhile, the market share variable has a positive and significant effect on banking performance as measured by Net Interest Margin but does not affect banking performance as measured by Return on Equity. Keywords : bank size, efficiency, capital adequacy, market structure, banking performance Abstrak- Determinan kinerja bank dapat dikelompokkan menjadi tiga kelompok yaitu ; 1) faktor spesifik bank yang terkait dengan keputusan manajemen dan tujuan kebijakan, 2) faktor industri yang terkait struktur industri dan pertumbuhan pasar, dan 3) faktor makroekonomi yang mencerminkan keadaan ekonomi dimana bank beroperasi. Penelitian  ini menganalisis pengaruh faktor spesifik bank dan faktor industri terhadap kinerja perbankan dengan menggunakan analisis regresi data panel pada sampel dari 39 Bank Umum Konvensional Indonesia selama periode 2015-2019. Faktor spesifik bank terdiri atas ukuran bank, efisiensi, dan kecukupan modal sedangkan faktor industri dalam penelitian ini adalah struktur pasar yang meliputi konsentrasi pasar dan pangsa pasar. Kinerja perbankan diukur dengan Return on Equity dan Net Interest Margin. Hasil penelitian ini menunjukkan hasil bahwa variabel ukuran bank dan efisiensi (BOPO) memiliki pengaruh negatif dan signifikan terhadap kinerja perbankan. Variabel kecukupan modal dan konsentrasi pasar tidak berpengaruh terhadap kinerja perbankan. Sedangkan variabel pangsa pasar memiliki pengaruh positif dan signifikan terhadap kinerja perbankan yang diukur dengan Net Interest Margin namun tidak berpengaruh terhadap kinerja perbankan yang diukur dengan Return on Equity. Keywords : ukuran bank, efisiensi, kecukupan modal, struktur pasar, kinerja perbankan 

scholarly journals The Effects of Macroeconomic and Bank Specific Factors on Nonperforming Financing in Sharia Commercial Bank in Indonesia

2020 ◽  
Vol 7 (2) ◽  
pp. 081
Author(s):  
Keti Purnamasari ◽  
Tariza Putri Ramayanti
Keyword(s):  
Commercial Bank ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Macroeconomic Factors ◽  
Capital Adequacy Ratio ◽  
Financing Risk ◽  
Negative Effect ◽  
Specific Factors ◽  
Positive Effect ◽  
Bank Specific Factors

Financing risk is often associated with the risk of default. This risk refers to the potential losses faced by the bank when financing provided to debtors is stuck. The purpose of this paper is to analyze the effect of macroeconomic and bank specific factors on nonperforming financing in sharia commercial bank in Indonesia. The macroeconomic factors included; inflation and Bank Indonesia Certificates Sharia (SBIS). The Bank specific factors included; Capital Adequacy Ratio (CAR), Return on Assets (ROA), Operations Expenses to Operations Income (BOPO), and Financing to Deposit Ratio (FDR). The period covered under this study was January 2011 to December 2017. Data was collected from Bank Indonesia website and Indonesia Banking Statistics. Contrary to other studies, the inflation and SBIS have not been found statistically significant with nonperforming financing. The results also show that NPF can be explained mainly by Bank specific factors. CAR, ROA, and FDR have a negative effect on NPF while BOPO has a positive effect on NPF.

scholarly journals Determinants of Deposit Money Banks Lending Behaviour to Private Sector of The Economy in Nigeria (1986-2017)

2021 ◽  
Author(s):  
Tonia Akindutire
Keyword(s):  
Private Sector ◽  
Significant Relationship ◽  
Bank Lending ◽  
Series Data ◽  
Financial Deepening ◽  
Reserve Requirement ◽  
Long Run ◽  
Lending Rate ◽  
Specific Factors ◽  
Bank Specific Factors

The study examined those factors that determine the deposit money banks lending behavior to private sector of the economy in Nigeria using annual time series data spanning from 1986 to 2017. Secondary data were sourced majorly from CBN Statistical Bulletin(2017). In measuring the variables, determinants of deposit money bank lendingbehaviour to private sector were subjected to bank specific factors, regulation factors, financial deepening and macroeconomic factors. The bank specific factors were proxied by volume of deposit (VD) and lending rate (LDR), regulation factor was proxied by reserve requirement (RSR), financial deepening was proxied by ratio of money supply to GDP (M2G)while macroeconomic variables was proxied by inflation (INF). The estimation techniques used for the study were Augmented Dickey Fuller test, pair wise granger causality test and auto regressive distributed lag (ARDL). It was found that, the variables in the series were integrated of difference order l(0) and l(1) and there was significant relationship between bank lending behaviours and the identified determinants. In addition, it was revealed that, the variables move in a long run, however, among the variables of interest, volume of deposit and M2G determine bank lending behaviour in the short and long run while RSR, INF and LDR retard lending to private sector. The study also found that, causality runs from volume of deposit to private sector credit. Hence, the study concluded that, there is significant relationship between bank lending behaviour private sectorand its determinants. It was recommended that, bank lending rate should be brought down or flexible to meet up the categories of borrowers, since there is common knowledge that high interest rate discourages borrowers and influences banks to select bad loan offer which may affect the bank returns in the long run. Secondly, the reserve requirement dictated by CBN on deposit money banks should be reduced so as to enable banks to be more liquid for the private sector to access funds for their productive purposes and lastly, inflation should be made below 2 digit, as inflation above a digit may be unfriendly to economy activities thereby affecting the private sector output which is germane to the economic growth.

scholarly journals Impact of Macro Economy on Financial Stability in Malaysia

SPLASH Magz ◽  
2021 ◽  
Vol 1 (2) ◽  
pp. 48-55
Author(s):  
Bambang Hadi Prabowo ◽  
◽  
Maria Garcia ◽  
Keyword(s):  
Interest Rates ◽  
Financial Stability ◽  
Short Term ◽  
Macroeconomic Factors ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Specific Factors ◽  
Bank Specific Factors

Research studies the influence of macroeconomic factors (inflation, exchange rates, and interest rates) and bank-specific factors (credit) on Non-Performing Loans (NPLs) in Malaysia for the period 2015 to 2018. This study uses the Vector Error Correction Model (VECM) to determine the effect of variables. independent consisting of macroeconomic factors and bank-specific factors. Based on the VECM estimation results, three variables that have a positive and significant effect on long-term NPL are credit, inflation and interest rates. Meanwhile, in the short term, there are only two variables that have a positive and significant effect on NPL, namely credit and interest rates. Inflation and exchange rate variables have a negative and insignificant effect on NPL in the short term.

scholarly journals Macroeconomics And Bank-Specific Factors Affecting Liquidity: A Study Of Nepali Commercial Banks

2018 ◽  
Vol 2 (1) ◽  
pp. 79-87
Author(s):  
Pushpa Raj Ojha
Keyword(s):  
Regression Analysis ◽  
Standard Deviation ◽  
Commercial Banks ◽  
Significant Relation ◽  
Return On Assets ◽  
Return On Equity ◽  
Factors Affecting ◽  
Specific Factors ◽  
The Relationship ◽  
Bank Specific Factors

This paper aims to examine the form and pattern of liquidity, NPL, return on assets, CAR, return on equity, GDP, inflation and interbank rate in Nepalese commercial banks. The study is intended to analyze the relationship between liquidity and bank specific variables in Nepalese commercial banks. The key findings stated that there is significant relation between numbers of variables that impacts on the liquidity performance of Nepalese commercial banks. The panel data of commercial banks from 2010/11 to 2016/17 has been taken for the purpose of the research. Mean, standard deviation, correlation and multiple regression analysis have been used to diagnose date to meet the specific objectives of research. The results reveal that there is significant influence of ROA, ROE, NPL, GDP and IBR on LIQ.

scholarly journals Determinants of Liquidity Considering Role of Market Competition; Evidence from Pakistan’s Banking Sector

2020 ◽  
Vol 2 (2) ◽  
pp. 51-59
Author(s):  
Amir Rafique ◽  
Muhammad Adeel ◽  
Kalsoom Akhtar ◽  
Muhammad Amir Alvi
Keyword(s):  
Credit Risk ◽  
Banking Sector ◽  
Panel Data Analysis ◽  
Market Competition ◽  
Data Set ◽  
Macroeconomic Factors ◽  
Negative Effect ◽  
Specific Factors ◽  
Bank Specific Factors

Current study empirically analyzes bank specific factors and macroeconomic factors that determine the liquidity reserves of banks functioning in Pakistan. To highlight the association, current study performed random effects estimates on a data set of 20 banks from 2006 to 2016.  Bank specific factors include bank size, capital and credit Risk. GDP and Inflation are the macroeconomic factors that were considered. Market competition has been measured through HHI. Based on panel data analysis, current study suggests that bank specific factors (except capital), macroeconomic factors and market competition significantly affect liquidity reserves of banks in Pakistan. These factors include bank size, credit risk, market competition, GDP and inflation. In addition, bank size, credit risk, GDP and Inflation revealed a negative effect on bank liquidity. On the other hand, market competition revealed a positive effect on bank liquidity. Capital showed an insignificant effect on bank liquidity.

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