Influential Factors Responsible for Profitability: A Technical Study on Commercial Banks in Bangladesh

This paper explores how many internal and external factors from 2007-2017 affect the competitiveness of commercial banks in Bangladesh. Many bank-specific variables are used to achieve the goals as internal factors, and macroeconomic variables are used as external factors. A sample of seven commercial banks will be used for this purpose. Return on equity is used as a proxy for profitability and capital adequacy, the size of asset quality banks, investment control, liquidity, resource structure, and economic indicators are used as proxies for the independent variable. The paper's overview findings show that asset structure, capital adequacy, and asset quality are the key factors in Bangladesh's profitability for the commercial bank. The paper's outcome indicates that if commercial banks are more worried about these factors, they could produce a better return on the competitive market.

Download Full-text

Performa modal Bank Syariah di tengah pandemi covid-19

JURNAL EKONOMI DAN BISNIS ISLAM ◽

10.32505/j-ebis.v6i2.3530 ◽

2021 ◽

pp. 142-159

Author(s):

Tri Inda Fadhila Rahma Inda

Keyword(s):

Banking Industry ◽

Financial Institution ◽

External Factors ◽

Capital Adequacy ◽

Islamic Banking ◽

Return On Assets ◽

Internal Factors ◽

Capital Adequacy Ratio ◽

Asset Quality ◽

Internal And External Factors

Capital is a very important function in overcoming risks that may occur in the Banking Industry. A bank is said to be healthy if a bank has sufficient capital despite possible risks. To see that a bank is healthy, capital indicators are also the most important measurement, namely through the capital adequacy ratio or Capital Asset Ratio (CAR). Things that can affect the size of the capital adequacy ratio can occur due to internal and external factors. Internal factors originating from the banking industry itself, such as profitability, asset quality, company size and liquidity. Meanwhile, external factors come from outside the company such as the macroeconomic condition of a country. The Covid-19 pandemic is one of the impacts that causes the economic condition of a country to weaken which impacts on investment. So this study aims to see how much the ability of Islamic banks in the midst of the Covid-19 Pandemic which began to occur in Indonesia from February 2020 to the end of 2020. And the factors that influence the capital adequacy ratio's size. The findings of this research show that during the Covid-19 pandemic, Islamic banking was able to show its performance as an ever-growing Islamic financial institution seen from the data on the development of assets and growth in deposits. Islamic banking CAR for the period of 2020 remains at a fairly strong level despite the covid-19 pandemic. Meanwhile, one of the internal factors that influence CAR is Return On Assets (ROA) with a significance value of 0.005.

Download Full-text

Risks Of Sharia Commercial Bank In Indonesia: Analysis Of Internal And External Factors

AL-ARBAH: Journal of Islamic Finance and Banking ◽

10.21580/al-arbah.2019.1.1.4137 ◽

2019 ◽

Vol 1 (1) ◽

pp. 81-94

Author(s):

Erlinda Kurnia Aufa ◽

Cita Sary Dja'akum

Keyword(s):

Commercial Bank ◽

Commercial Banks ◽

Fixed Effects ◽

External Factors ◽

Capital Adequacy ◽

Research Approach ◽

Fixed Effects Model ◽

Significant Negative Effect ◽

Negative Effect ◽

Internal And External Factors

Purpose - This study aims to analyze the effect of inflation, gross domestic product (GDP), capital adequacy ratio (CAR), and financing to deposit ratio (FDR) to non performing financing (NPF) at Islamic Commercial Banks in Indonesia.Method - The research approach used is a quantitative approach. Determination of samples is done by purposive sampling method. The data used is secondary data, obtained from publication reports on the official website of each Sharia Commercial Bank, Bank Indonesia, and the Central Statistics Agency. The population in this study were all Islamic Commercial Banks registered in the Statistics of Islamic Banking in Indonesia for the period 2013-2017. Based on the specified criteria, five Sharia Commercial Banks were obtained as research samples. This study uses panel data regression analysis with the Fixed Effects Model approach which is processed through the Eviews 10 program.Result - The results of hypothesis testing show that partially Inflation has a positive but not significant effect on NPF, GDP has a significant negative effect on NPF, CAR has a negative but not significant effect on NPF, and FDR has a significant negative effect on NPF. Simultaneously inflation, GDP, CAR, and FDR have a significant effect on NPF.Implication - This study uses all data from commercial Islamic bank.Originality - This study analyzes the determining factors that influence financing risks from both internal and external factors.

Download Full-text

Risks Of Sharia Commercial Bank In Indonesia: Analysis Of Internal And External Factors

AL-ARBAH: Journal of Islamic Finance and Banking ◽

10.21580/al-arbah.v1i1.4137 ◽

2019 ◽

Vol 1 (1) ◽

pp. 81

Author(s):

Erlinda Kurnia Aufa ◽

Cita Sary Dja'akum

Keyword(s):

Commercial Bank ◽

Commercial Banks ◽

Fixed Effects ◽

External Factors ◽

Capital Adequacy ◽

Research Approach ◽

Fixed Effects Model ◽

Significant Negative Effect ◽

Negative Effect ◽

Internal And External Factors

Purpose - This study aims to analyze the effect of inflation, gross domestic product (GDP), capital adequacy ratio (CAR), and financing to deposit ratio (FDR) to non performing financing (NPF) at Islamic Commercial Banks in Indonesia.Method - The research approach used is a quantitative approach. Determination of samples is done by purposive sampling method. The data used is secondary data, obtained from publication reports on the official website of each Sharia Commercial Bank, Bank Indonesia, and the Central Statistics Agency. The population in this study were all Islamic Commercial Banks registered in the Statistics of Islamic Banking in Indonesia for the period 2013-2017. Based on the specified criteria, five Sharia Commercial Banks were obtained as research samples. This study uses panel data regression analysis with the Fixed Effects Model approach which is processed through the Eviews 10 program.Result - The results of hypothesis testing show that partially Inflation has a positive but not significant effect on NPF, GDP has a significant negative effect on NPF, CAR has a negative but not significant effect on NPF, and FDR has a significant negative effect on NPF. Simultaneously inflation, GDP, CAR, and FDR have a significant effect on NPF.Implication - This study uses all data from commercial Islamic bank.Originality - This study analyzes the determining factors that influence financing risks from both internal and external factors.

Download Full-text

Determinants of Commercial Banks’ Profitability. Evidence from Hungary

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis ◽

10.11118/actaun201866051325 ◽

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.

Download Full-text

Ketahanan Bank Umum Syariah di Indonesia Terhadap Fluktuasi Makroekonomi dalam Negeri dan Suku Bunga Dana Federal Reserve

Journal of Applied Islamic Economics and Finance ◽

10.35313/jaief.v1i2.2469 ◽

2021 ◽

Vol 1 (2) ◽

pp. 349-361

Author(s):

Donna Sita Soraya Kristanti Jatmiko ◽

Djoni Djatnika ◽

Setiawan Setiawan

Keyword(s):

Interest Rates ◽

Federal Reserve ◽

Commercial Banks ◽

Banking Sector ◽

Global Financial Crisis ◽

Capital Adequacy ◽

Return On Equity ◽

Vector Error Correction ◽

The Global Financial Crisis ◽

Internal And External Factors

The development of banking in a country cannot be separated from internal and external factors that can influence it. The monetary crisis in 1998 and the global financial crisis in 2008 are some examples that show that the banking sector can be affected by the surrounding economic conditions, both from within and outside the country. The purpose of this study is to determine the resilience of Islamic commercial banks in Indonesia if there are shocks that occur in macroeconomics, in this case, namely inflation, exchange rates, Bank Indonesia benchmark interest rate (BI rate), SBIS yields (rSBIS) and Federal Reserve funds interest rates. (FFR). This study uses the Vector Autoregression (VAR) and Vector Error Correction Model (VECM) methods. The conclusion of this study is that Non-Performing Financing (NPF) and Return on Assets (ROA) in Islamic commercial banks in Indonesia tend to be more resistant to fluctuations that occur in domestic macroeconomics and FFR. The Capital Adequacy Ratio (CAR) is relatively stable in responding to a shock, while the Return on Equity (ROE) and Financing Deposit Ratio (FDR) have fluctuated in the long term in other words, they are more vulnerable to shocks and fluctuations that occur in domestic macroeconomic variables and FFR.

Download Full-text

PENGARUH SARANA DAN PRASARANA TERHADAP MOTIVASI BELAJAR SISWA DI MI QUBA KOTA SORONG

AL-FIKR: Jurnal Pendidikan Islam ◽

10.32489/alfikr.v7i2.226 ◽

2021 ◽

Vol 7 (2) ◽

pp. 114-133

Author(s):

Khatifah Khatifah ◽

Arnita Arnita

Keyword(s):

Learning Process ◽

Student Motivation ◽

Quantitative Research ◽

Sampling Technique ◽

Influential Factors ◽

External Factors ◽

Learning Motivation ◽

Internal Factors ◽

Fifth Grade Students ◽

Internal And External Factors

In attracting students' attention in learning, teacher creativity is needed to arouse students' desires and can foster student motivation to learn. In order for the learning process to run according to what the teacher wants, students need motivation. Motivation is influenced by several factors, both internal and external factors. Internal factors are factors that arise from within students, such as health conditions, interest in learning and so on. While external factors are influential factors that arise from outside students, such as teachers, the environment, and the availability of facilities and infrastructure, as well as teaching methods and strategies. Facilities and infrastructure are very vital and very important things in supporting the smoothness or ease in the learning process. This study examines the effect of facilities and infrastructure on student motivation at Madrasah Ibtidaiyah (MI) Quba, Sorong City. The type of research used in this research is quantitative research using a survey approach. The sample of this study was the fifth grade students, totaling 35 students. The sampling technique used was non-probability sampling and was a saturated sampling. The research instrument used a Likert scale questionnaire. The data that has been collected is then processed using the SPSS 20.0 for Windows application. Based on the results of research using statistical analysis and the help of the SPSS 20.0 application program for windows, it shows that there is an influence between facilities and infrastructure on student learning motivation in class V students, obtained fcount of 422.239 and ftable of 3.285 so it can be concluded that fcount (422,239) > ftable (3.285), and the value of T_count 20,548 > T_table 1,692, it can be stated that H1 is accepted or there is an influence between facilities and infrastructure (X) on students' learning motivation at MI Quba, Sorong City (Y).

Download Full-text

DETERMINANTS OF PROFITABILITY: A CASE OF COMMERCIAL BANKS IN PAKISTAN

Humanities & Social Sciences Reviews ◽

10.18510/hssr.2021.921 ◽

2021 ◽

Vol 9 (2) ◽

pp. 01-13

Author(s):

Mohammad Farooq ◽

Shiraz Khan ◽

Atif Atique Siddiqui ◽

Muhammad Tariq Khan ◽

Muhammad Kamran Khan

Keyword(s):

Commercial Banks ◽

Inflation Rate ◽

Capital Adequacy ◽

Economic Factors ◽

Internal Factors ◽

Return On Equity ◽

Leverage Ratio ◽

Net Interest Margin ◽

Number Of Branches ◽

Interest Margin

Purpose of the study: This study aims to investigate the impact of bank-specific and macro-economic factors on commercial banks profitability in Pakistan. Methodology: This study uses both internal and external factors as independent variables. Internal factors are inclusive of capital adequacy, operational efficiency, deposit ratio, liquidity, leverage, number of branches, and bank size, while external indicators are pertaining to GDP, rate of inflation, interest rate, and rate of foreign exchange. Return on assets, return on equity, and net interest margin is employed as proxies for measuring profitability. Balanced panel data of 25 commercial banks over a period ranging from 2009 to 2018 is analyzed through descriptive statistics and fixed effects regression model. Main Findings: The empirical findings revealed that among internal factors, capital adequacy ratio, deposit ratio, leverage ratio, liquidity ratio, and bank size significantly affect the return on asset, while in the case of macro-economic factors, inflation rate, exchange rate, and GDP have a significant impact on return on asset. On the other hand, return on equity is significantly affected by deposit ratio, leverage ratio, and operational efficiency, whereas among macro-economic factors, only the inflation rate had a significant effect on return on equity. Furthermore, in the case of net interest margin, among internal factors, capital adequacy ratio, deposit ratio, bank size, and the number of branches have a significant impact on net interest margin, whereas, among macro-economic factors, interest rate, inflation rate, and exchange rate significantly affected net interest margin. Applications of this study: This study has greater importance for government, bank managers, investors, academicians, and scholars. Originality/Novelty: In this study, the number of branches is taken as a novel factor in Pakistan's case and bridges the gap in the banking literature of Pakistan.

Download Full-text

The Role of Using CAMELS Model in Analyzing the Factors Affecting the Performance of The Jordanian Commercial Banks (2014-2019)

Theory Methodology Practice ◽

10.18096/tmp.2021.03.01 ◽

2021 ◽

Vol 17 (2) ◽

pp. 3-11

Author(s):

Senan Amer

Keyword(s):

Quality Management ◽

Commercial Banks ◽

Capital Adequacy ◽

Rate Of Return ◽

Return On Assets ◽

Return On Equity ◽

Factors Affecting ◽

Management Efficiency ◽

Asset Quality ◽

The Impact

In this study, the factors affecting the performance of Jordanian commercial banks have been analyzed using the elements of the CAMELS model, along with identifying the most important factors. The study targeted the impact of twenty Jordanian commercial banks on performance-; these banks were listed on the Amman Stock Exchange during the period of 2014-2019. The researcher used the Data Pooled Regression Method, due to its relevance to the nature of the data used in the study, where this method is used in the case of a time series and cross-sectorial data. The Rate of Return on Assets and the Rate of Return on Equity were used as the two variables on which the banks’ performance was measured. However, the independent variables included the CAMELS model elements which are capital adequacy, asset quality, management efficiency, earnings, liquidity, and sensitivity to market risks, in addition to macroeconomic variables, which include the rate of economic growth and the rate of inflation. The study concluded that capital adequacy, asset quality, management efficiency, and earnings are among the most important and most influential factors with regards to the Jordanian commercial banks, which - are is represented by the Rate of Return on Assets and the Rate of Return on Equity. Moreover, the study also concluded that it is possible to derive a miniature model from the CAMELS model called the CAME model, which has a great ability to explain and measure the performance of commercial banks in Jordan. Finally, the study recommended the Central Bank of Jordan to use the CAMELS model to evaluate Jordanian commercial banks.

Download Full-text

Risk Determinant of Musharakah Financing: A Study in Indonesia

ACRN Journal of Finance and Risk Perspectives ◽

10.35944/jofrp.2020.9.1.004 ◽

2020 ◽

Vol 9 (1) ◽

pp. 45-56

Author(s):

Rosmini Ramli ◽

Dian Masyita ◽

Mokhamad Anwar

Keyword(s):

Commercial Banks ◽

Quantitative Method ◽

External Factors ◽

Islamic Banking ◽

Internal Factors ◽

Financial Ratio ◽

Panel Data Regression ◽

Data Regression ◽

Ratio Data ◽

Internal And External Factors

The purpose of this paper is to find out the influence of internal and external factors on the risk of musharaka financing of Islamic Commercial Banks in Indonesia. Financing risks in previous Islamic banking studies focus more on overall financing risks involving internal and external aspects, both separately and jointly. There have been no studies that examine the internal and external aspects of sharia commercial banks on financing risks, especially in the musharakah contract. This study will complement the literature on the aforementioned issue. This study uses a quantitative method with panel data regression analysis. The data used is quarter financial ratio data from all Sharia Commercial Banks in Indonesia for the period 2012-2017. The results of the study show that bank internal factors predominantly influence the risk of musharakah financing. Whereas on external factors, only GDP growth has a significant effect.

Download Full-text

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

Banks and Bank Systems ◽

10.21511/bbs.15(2).2020.16 ◽

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.

Download Full-text