scholarly journals DETERMINANTS OF COMMERCIAL BANKS PROFITABILITY THROUGH ANALYSIS OF FINANCIAL PERFORMANCE INDICATORS: EVIDENCE FROM KOSOVO

2017 ◽  
Vol 18 (0) ◽  
pp. 160-170 ◽  
Author(s):  
Artor Nuhiu ◽  
Arbër Hoti ◽  
Mejdi Bektashi
Keyword(s):  
Financial Performance ◽  
Performance Indicators ◽  
Commercial Banks ◽  
Banking Sector ◽  
Financial Time Series ◽  
Capital Adequacy ◽  
Macroeconomic Factors ◽  
Determinant Factors ◽  
Net Interest Margin ◽  
Asset Quality

The purpose of this study is to elaborate whether the determinants of commercial banks’ profitability affect the financial performance of commercial banks in Kosovo. Performance evaluation of commercial banks in Kosovo is done through measurement of financial performance indicators such as Return on Average Equity (ROAE), Return on Average Assets (ROAA) and Net Interest Margin (NIM). The study identifies the main factors that affect the profitability of commercial banks through analysis of financial time series and panel data of the banking sector in Kosovo. The study presents three models of financial performance analysis which highlight the influencing factors. The models are based on regression analysis, and the obtained results emphasize the relationship between the determinant factors of commercial banks profitability expressed through analysis of financial performance indicators. The study concludes that commercial banks profitability in Kosovo is driven mainly by internal determinant factors such as capital adequacy, asset quality and management efficiency, while macroeconomic factors have insignificant impact on financial performance of commercial banks.

scholarly journals Applying the CAMEL model to assess performance of commercial banks: empirical evidence from Vietnam

2020 ◽  
Vol 15 (2) ◽  
pp. 177-186
Author(s):  
Anh Huu Nguyen ◽  
Hang Thu Nguyen ◽  
Huong Thanh Pham
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Fixed Effects ◽  
Ordinary Least Squares ◽  
Capital Adequacy ◽  
Fixed Effects Model ◽  
Return On Equity ◽  
Net Interest Margin ◽  
Asset Quality ◽  
The Impact

The paper aims to investigate the impact of CAMEL components on the financial performance of commercial banks in Vietnam. Three econometric models are built using four CAMEL’s crucial indicators as independent variables (capital adequacy, asset quality, management effectiveness, bank liquidity) and return on assets (ROA), return on equity (ROE), and net interest margin (NIM) as proxies for commercial banks’ financial performance – dependent variables. The research sample includes 31 Vietnamese commercial banks over the 6-year period, from 2013 to 2018. The results show a better fit of the fixed effects model (FEM) in terms of the research methodology compared to the ordinary least squares (OLS) and random effects model (REM). It was found that capital adequacy, asset quality, liquidity and management efficiency affect the performance of Vietnamese commercial banks. Acknowledgement This research is funded by National Economics University (NEU), Hanoi, Vietnam. The authors thank anonymous referees for their contributions and the NEU for funding this research.

Comparative analysis of Financial performance of HDFC and SBI bank on the basis of Ratio analysis

2021 ◽  
pp. 111-114
Author(s):  
Reetika Verma
Keyword(s):  
Financial Performance ◽  
Banking Sector ◽  
Banking System ◽  
Capital Adequacy ◽  
Ratio Analysis ◽  
Return On Equity ◽  
Net Interest Margin ◽  
Capital Adequacy Ratio ◽  
Equity Ratio ◽  
Accounting Ratios

The banking sector in any economy plays a significant role in its growth and development. This paper is based on financial performance analysis of two leading banks of India. This paper aims to evaluate financial performance of HDFC and SBI bank on the basis of accounting ratios and also to study the functioning of the Indian banking system [6]. In this paper different ratios of both the banks are compared. Capital adequacy ratio, debt equity ratio, leverage ratios, profit and loss account ratios, net interest margin ratio, return on equity and other ratios are used to compare the performance of both the banks. This research is based on the data collected from financial statements of the banks. The performance of both the banks are compared from the year 2015 to 2020. It is observed that performance of HDFC is better than SBI not only in terms of ratio analysis but also in terms of customer satisfaction.

scholarly journals Bank Regulation and Level of Non performing Loans in Commercial Banks in Nakuru County Kenya

2020 ◽  
Vol 2 (2) ◽  
pp. 59-76
Author(s):  
Geoffrey Indeje Muhanji ◽  
Joseph Theuri
Keyword(s):  
Central Bank ◽  
Commercial Banks ◽  
Bank Regulation ◽  
Capital Adequacy ◽  
Liquidity Management ◽  
Macroeconomic Factors ◽  
Nonperforming Loans ◽  
Management Efficiency ◽  
Asset Quality ◽  
The Relationship

The study sought to determine the effect of bank regulation and level of nonperforming loans in commercial banks in Nakuru County Kenya. The specific objectives of the study were to explore the effect of capital adequacy on the level of nonperforming loans in commercial banks in Nakuru County Kenya, to find out the effect of asset quality on the level of nonperforming loans in commercial banks in Nakuru County Kenya, to evaluate the effect of liquidity management on the level of nonperforming loans in commercial banks in Nakuru County Kenya, to examine the effect of management efficiency on the level of nonperforming loans in commercial banks in Nakuru County Kenya and to determine the moderating effect of macroeconomic factors on the relationship between bank regulation and level of nonperforming loans. The literature review focused on portfolio theory of investment, capital asset pricing theory and the capital buffer theory of capital adequacy. The primary data was collected using structured questionnaires and secondary data was collected from the banking survey 2017 and central bank of Kenya annual supervisory reports. The study employed multiple linear regression analysis and the finding revealed that there exist a negative and statistically insignificant relationship between capital adequacy and non-performing loans. It was also observed that there exist a negative and statistically insignificant relationship between liquidity management and non-performing loans. On the other hand, there exist a positive and statistically significant relationship between asset quality and non-performing loans. Similarly, there exist a positive and statistically insignificant relationship between management efficiency and non-performing loans. Finally, the findings indicated that macroeconomic factors have moderating effect on the relationship between bank regulations and non-performing loans in commercial banks in Nakuru County. It was concluded that asset quality positively influences non-performing loans while management efficiency influence positively the non-performing loans. Similarly, liquidity management exerts a negative influence on non-performing loans. Finally, capital adequacy influence negatively on non-performing loans. The study recommends that Central Bank of Kenya should regularly access lending behavior to ensure compliance with banking regulations to avoid increasing incidences of non-performing loans. In addition, Central Bank of Kenya should closely monitor banks with deteriorating asset quality. Further, Central Bank of Kenya should strictly monitor the economic sector and ensure that banks provide adequate provisions for loans to mitigate risks of default. Furthermore, banks should maintain a good balance on deposits and lending out loans and adhere to regulators decisions about monetary policies. Finally, banks should increase the operational efficiency of operation weakness and improve corporate governance on the sanction of loans and Central Bank of Kenya should focus on managerial performance in order to detect banks with potential increases in non-performing loans.

scholarly journals Financial performance after the Spanish banking reforms: A comparative study of 19 commercial banks

2014 ◽  
Vol 4 (2) ◽  
pp. 70-82 ◽  
Author(s):  
Pison F. Irene ◽  
Cibrán F. Pilar ◽  
Lious Agbor Tabot Ntoung
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Commercial Banks ◽  
Positive Impact ◽  
Capital Adequacy ◽  
Research Database ◽  
Banking Reforms ◽  
The 2008 Financial Crisis ◽  
Asset Quality ◽  
The Impact

A diagnostic review of the Spanish financial system during the 2008 financial crisis reveals the emergency need for banking reform in the sector. In an attempt to evaluate the impact of the Spanish reform, the present study examines the bank´s performance before/after the reform was adopted, using data of 19 Spanish commercial banks extracted from the Global Vantage research database (Standard and Poor’s) over the period 2006 to 2013. This study uses multivariable regression method to investigate the impact of the CAMELS rating system: capital adequacy, asset quality, management quality, liquidity and sensitivity to market risks on the bank´s performance such as earnings efficiency. The time-line of the study is essential because it helps us to determine the financial performance of Spanish commercial banks before the banking reforms during the financial crisis and an important set in terms of mergers and acquisition in the banking industry. The empirical results have found strong and positive evidence that Capital Adequacy, Management Capacity, Liquidity and Sensitivity to Market Risk are useful predictors of banks performance (earnings efficiency), thus, any reform pilot toward this banking indicators will eventually have a positive impact on banking performance. Base on the present study, the Spanish reform was so vital for better banking performance. Therefore, this study serves not only to academics but also to policy makers.

scholarly journals Performance evaluation using the CAMELS model: A comparative study of local commercial banks in Qatar and Kuwait

2021 ◽  
Vol 16 (3) ◽  
pp. 152-165
Author(s):  
Rawan Abuzarqa ◽  
◽  
Tibor Tarnóczi ◽  
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Financial Analysis ◽  
Banking System ◽  
Capital Adequacy ◽  
Accounting Data ◽  
Study Approach ◽  
Analysis Process ◽  
Two Factors ◽  
Asset Quality

Nowadays, the banking system is undergoing significant changes. Digitalization that appears in Industry 4.0 also pioneers in the banking system, so we can also talk about Bank 4.0 as a new development direction. In this shift in the digital age, it becomes even more critical to examine the performance of banks. The case study approach was based on an attempt to diagnose the performance of a sample of local commercial banks in Qatar and Kuwait based on their financial statements for the period 2013–2017, and approve the existing accounting data as sources for the financial analysis process, by using essential financial analysis tools such as financial ratios. The output of the analysis was used to measure performance. All this is applicable when using the CAMELS rating model to evaluate the financial performance of the banking sector. The results show statistically significant differences between countries for four factors (Asset quality, Management efficiency, Earnings quality and Sensitivity) and none for the remaining two (Capital adequacy and Liquidity management) because the significant level is higher than 5%. However, the two factors with no significant differences are vital to the prudent operation of banks, mainly that Qatari banks perform better than Kuwaiti banks.

Performance of banking industry in Bangladesh: Insights of CAMEL rating

2017 ◽  
Vol 04 (02n03) ◽  
pp. 1750006 ◽  
Author(s):  
Syed Moudud-Ul-Huq
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Rating System ◽  
Managerial Ability ◽  
Strategic Plans ◽  
Composite Rating ◽  
Asset Quality

This study attempts primarily to measure the financial performance of banking industry of Bangladesh for the periods 2013–2014 and to rate them according to the composite rating system. For this purpose, 10 private commercial banks (PCBs) have been selected from 38 PCBs. CAMEL has critically analyzed the financial performance of these banks. This finds that most of the banks get 2.14 with an average rating of composite range, where only Eastern Bank Ltd. gets “Strong” rating, seven PCBs get “Satisfactory” rating, AB Bank Ltd. and City Bank Ltd. lay middle of the range of composite score. From this ground, it is clearly reflected that most of the PCBs in Bangladesh have performed quite satisfactorily in recent years. The performance of most banks is dependent more on the managerial ability in formulating strategic plans and the efficient implementation of its strategies. Maintenance of asset quality is the major challenge in this year and is feared to remain so in 2014. The banking sector in Bangladesh has passed somewhat an average year regarding governance, profitability and soundness in 2013. Finally, it is recommended that the banks should be more careful to ensure the quality of assets and its uses, and increased their efficiency in managerial grids.

scholarly journals Comparative Performance Evaluation of Selected Commercial Banks in India using CAMELS Rating Model

2018 ◽  
Vol 2 (1) ◽  
pp. 24 ◽  
Author(s):  
Elizabeth M. Samuel
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Global Market ◽  
Capital Adequacy ◽  
Annual Reports ◽  
Comparative Performance ◽  
Earning Capacity ◽  
Management Efficiency ◽  
Asset Quality ◽  
Rating Model

Sound financial health of a bank is the guarantee not only to its depositors but is equally significant for the shareholders, employees and whole economy as well. As sequel to this maxim, efforts have been made from time to time to measure the financial position of each bank and manage it efficiently and effectively.Indian banking sector widely includes commercial, nationalized, co-operative, private and international banks in its fold. In the present study an attempt is made to evaluate the financial performance of three major commercial banks (IOB, Canara Bank and Syndicate Bank) using CAMELS Rating Model. CAMELS rating model is basically an approach widely used to measure the performance of banking unit inside and outside India. This model measures the performance of banks from all important parameters like Capital adequacy, Asset quality, Management efficiency, Earning quality, Liquidity and sensitivity to market. The study is based on secondary data drawn from the annual reports. For the purpose of evaluation the data’s of five years (2011-2016) before demonetization are analyzed by calculating the 17 ratios related to CAMELS rating model. It is found out that according to Basel Norm the overall state of capital adequacy of all the three banks are satisfactory. As far as loan portfolio is concern, the overall state of asset quality and management efficiency are satisfactory, whereas the earning capacity of the banks is not and the liquidity is also not satisfactory. The high level of NPAs and sluggishness in the domestic growth, slow recovery in the global economy and the continuing uncertainty in the global market leading to lower exports and imports are one of the main reasons for the low earning capacity of banks along with these reasons RBI’s new rules to make higher provisioning for substandard assets also affected the earning capacity of all the three banks. Based on the evaluations all the three commercial banks should improve its earning capacity and the liquidity position to perform efficiently and effectively.

scholarly journals Determinants of Commercial Banks’ Profitability. Evidence from Hungary

2018 ◽  
Vol 66 (5) ◽  
pp. 1325-1335
Author(s):  
Isah Serwadda
Keyword(s):  
Commercial Banks ◽  
Regression Models ◽  
Capital Adequacy ◽  
Panel Regression ◽  
Internal Factors ◽  
Bank Profitability ◽  
Net Interest Margin ◽  
Capital Adequacy Ratio ◽  
Asset Quality ◽  
Panel Regression Models

This paper aims to find out whether bank‑specific (internal) factors impact on the profitability of commercial banks in Hungary for 16 a year period ranging from 2000–2015. The study employs a sample of twenty‑six commercial banks with four hundred sixteen observations. The study employs return on average assets (ROAA) as a proxy for bank profitability, and it also considers bank‑specific (internal) factors as independent variables. These include asset quality (non‑performing loans), overhead costs, bank size, net interest margin, and liquidity risk plus capital adequacy ratio. The study uses panel regressions, descriptive statistics and correlation analysis for the investigations. The panel regression models are to estimate the impact of bank‑specific (internal) factors on bank profitability. The Hausman specification test was conducted on the panel regression models in order to identify the best and appropriate model for the study. The empirical findings reveal that non‑performing loans, overhead costs and liquidity had a significant negative impact on bank profitability as bank size had a significant positive impact on profitability. However, net interest margin and capital adequacy ratio had no impact on bank profitability. The study concludes that bank size and asset quality are bank‑specific factors that have the biggest impact on commercial banks’ profitability in Hungary for the period under investigation. The study recommends that commercial banks should endeavor to manage and reduce overhead costs to be able to earn more profits since overhead costs adversely affect bank profitability. More so, commercial banks’ managers should regularly monitor credit and liquidity risk indicators as well as pursuing diversification policies of income sources while upholding optimisation of operational costs.

Financial performance of commercial banks in the emerging markets

2022 ◽  
Vol 5 (2, special issue) ◽  
pp. 244-257
Author(s):  
Wondmagegn Biru Mamo ◽  
Habtamu Legese Feyisa ◽  
Mekonnen Kumlachew Yitayaw
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Financial Performance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Trade Openness ◽  
Exchange Rate Volatility ◽  
Internet Access ◽  
Net Interest Margin ◽  
The Impact

In the economic growth of a country, the banking sector plays a significant role (Alam, Rabbani, Tausif, & Abey, 2021). The overall objective of the study is to investigate the financial performance of commercial banks in emerging markets. The study tried to see the impact of governance, exchange rate volatility, trade openness, and internet access on the financial performance of commercial banks in Ethiopia during the years from 2014 to 2019. The study employed a random-effects model using balanced panel data. The result indicated that composite governance index, trade openness, and internet access have a positive and statistically significant effect on the financial performance of commercial banks as measured by their return on assets. However, the exchange rate volatility has a negative and statistically significant effect on the financial performance of commercial banks. On the other hand, the result of bank-specific variables considered in the study such as profit margin, asset utilization, net interest margin, overhead efficiency, and numbers of branches have a positive and statistically significant effect on the financial performance of commercial banks. Contrarily, the equity multiplier ratio has a negative and significant effect on the financial performance of commercial banks

scholarly journals Evaluation of the Financial Performance between Traditional Private Commercial Banks and Islamic Banks in Bangladesh

2020 ◽  
Vol 4 (2) ◽  
pp. 1-10
Author(s):  
S. M. Akber ◽  
Asha Dey
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Standard Test ◽  
Capital Adequacy ◽  
Islamic Banks ◽  
Test Format ◽  
Average Ratio ◽  
Significant Difference ◽  
Asset Quality

The paper analyzes and evaluated the performance of Islamic banks and Traditional private commercial banks in Bangladesh with a duration from 2015 to 2019. The basis of the analysis used in this paper is CAMEL test.  All the relevant data has collected from the bank’s websites. To measure and compare the performance this paper has used a sample of five Islamic banks and five Traditional private commercial banks. It considered the average ratio of each year.  A standard test format (CAMEL tests) has used to analyze the performance of Islamic and Traditional private commercial banks. To justify the reliability of the data this paper has used t-tests. The outcome of this paper says that apart from the quality of the management significant difference doesn’t exist between the performance of Islamic Banks and Traditional private commercial banks in Bangladesh based on CAMEL test. Considering the quality of the management and asset quality Traditional private commercial banks perform better, but for the capital adequacy and liquidity position Islamic banks perform better in Bangladesh.

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