scholarly journals Bank Specific, Industry Concentration, and Macroeconomic Determinants of Egyptian Banks' Profitability

2018 ◽  
Vol 8 (1) ◽  
pp. 380
Author(s):  
Mohamed Galal Abobakr
Keyword(s):  
Banking Sector ◽  
Annual Data ◽  
Return On Assets ◽  
Bank Profitability ◽  
Return On Equity ◽  
Operating Income ◽  
Macroeconomic Variables ◽  
Generalized Methods Of Moments ◽  
Macroeconomic Determinants ◽  
Methods Of Moments

This paper aims to explain the elements that affect banks' profitability in the Egyptian banking sector during the period from 2006 to 2015. The researcher uses unbalanced panel annual data for 26 working banks in the Egyptian market. Generalized methods of moments (GMM) estimators are applied to define the most affected factors. Return on assets (ROE) and the return on equity (ROA) have been used as measurements of bank profitability. The findings of the study reveal that high profitability are associated with large bank size, large capital ratio and large operating income, while lower profitability is associated with higher non-interest income. As macroeconomic variables do affect profitability significantly, the researcher suggests that macroeconomic strategies that encourage low inflation and sustain growth rate, enhances loans expansion, boost banks' profitability.

scholarly journals The Impact of Financial Ratios, Operational Efficiency and Non-Performing Loan Towards Commercial Bank Profitability

2016 ◽  
Vol 1 (1) ◽  
pp. 43-50
Author(s):  
Fiola Christaria ◽  
Ratnawati Kurnia
Keyword(s):  
Banking Sector ◽  
Operational Efficiency ◽  
Capital Adequacy ◽  
Public Confidence ◽  
Return On Assets ◽  
Bank Profitability ◽  
Operating Income ◽  
Capital Adequacy Ratio ◽  
Income Ratio ◽  
The Impact

Objective - The objective of this paper is to determine the impact of Capital Adequacy Ratio (CAR), Loan to Deposit Ratio (LDR), Operational Efficiency proxies by Operational Expense to Operating Income Ratio (BOPO)and Non-Performing Loan (NPL) towards bank profitability proxies by Return on Assets (ROA). Methodology/Technique - Purpose samplingis applied to gather samples of the banking sector that was listed on the Indonesia Stock Exchange for the period of 2012 - 2014. Multiple regression analysis was used to analyse data. Findings - The F test result shows that CAR, LDR, BOPO, and NPL simultaneously, have a significant impact towards ROA. This means that the model can be used to predict bank profitability. It is also deduced that Operational Efficiency proxies by Operational Expense to Operating Income Ratio has a significant impact towards banking profitability. Novelty - This paper suggests that banks perform lending selectively and banks maintain the level of non-performing loans to be low in order to manage the risks and to improve their profitability as a means of increasing public confidence level. Type of Paper Empirical Keywords: Capital Adequacy Ratio; Loan to Deposit Ratio; Non-performing Loan; Operating Expense to Operating Income; Return on Assets. JEL Classification: D81, G21.

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 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 Gestão do ciclo financeiro, rentabilidade e restrições financeiras

2019 ◽  
Vol 17 (4) ◽  
pp. 77
Author(s):  
Rodrigo Zeidan ◽  
Christiano Vanzin
Keyword(s):  
Cost Of Debt ◽  
Return On Assets ◽  
Return On Equity ◽  
Revenue Growth ◽  
Cash Conversion Cycle ◽  
Operating Margin ◽  
Generalized Methods Of Moments ◽  
Methods Of Moments ◽  
The Relationship ◽  
Privately Owned

<p>We investigate the relationship between cash conversion cycle (CCC) management and value creation. We extend a standard working capital management model to establish measurable hypotheses for privately owned companies in Brazil. We define hypotheses that relate profitability measures, such as return on assets (ROA) and return on equity (ROE), and the cash conversion cycle of a panel data sample of 318 Brazilian companies with available data for at least 8 of 9 fiscal years between 2009 and 2017. We estimate these relationships via generalized methods of moments (GMM) to deal with endogeneity among accounting variables. Evidence indicates that lower C2C improves ROA but not ROE. Additional assumptions included: (1) companies with a negative CCC tend to grow faster; (2) more indebted companies manage their cash-flow better; (3) smaller companies have a longer CCC; and (4) companies with longer CCC have higher operating margin. Evidence is that only ROA is related to cost of debt, and that total debt is the only variable that helps explain revenue growth (which probably captures firm size as well). Still, without the ability to issue more debt, companies are restricted in growing sales. Finally, and unexpectedly, we find that lower CCC indicates higher operating margin.</p>

scholarly journals Comparative Analysis of Banking System Profitability in Western Balkan Countries

2019 ◽  
Vol 2 (2) ◽  
pp. p33 ◽  
Author(s):  
Qazim Tmava ◽  
Fahredin Berisha ◽  
Milaim Mehmeti
Keyword(s):  
Comparative Analysis ◽  
Interest Rates ◽  
Commercial Banks ◽  
Direct Investment ◽  
Banking Sector ◽  
Banking System ◽  
Return On Assets ◽  
Return On Equity ◽  
Macroeconomic Variables ◽  
Balkan Countries

The aim of this paper is to analyze the profitability of the banking sector in the Western Balkan countries. (Note 1) This paper reviews return on assets (ROA) as an indicator of profit and return on equity (ROE) as an indicator of profitability in the banking systems of the respective countries, as well as some other macroeconomic variables that influence them. The main objective of this study is to identify the specific and macroeconomic variables of this industry, that have an impact on the profitability of commercial banks operating in the Western Balkan countries during the 2008-2015 period. Specifically, this paper addresses external indicators (gross domestic product, remittances, foreign direct investment, unemployment), and industry and bank specific indicators (assets, loans, loan-to-deposit ratio, non performing loans and interest rates) that affect the profitability of the banking system in respective countries. Therefore, according to the data generated during the research and the literature review, the profitability of banks measured by the ROA and ROE indicators, regarding the analyzed countries, turns out to be extremely low, especially compared to EU countries where they strive.

Non-performing Assets and Profitability: Case of Indian Banking Sector

2020 ◽  
pp. 097226292091410 ◽  
Author(s):  
Dolly Gaur ◽  
Dipti Ranjan Mohapatra
Keyword(s):  
Banking Sector ◽  
Random Effect ◽  
Time Frame ◽  
Return On Assets ◽  
Data Set ◽  
Bank Profitability ◽  
Macroeconomic Factors ◽  
Return On Equity ◽  
Robust Standard Error ◽  
The Impact

At present, the Indian banking sector is facing an arduous time in the form of an increasing trend in non-performing assets (NPAs), which is testing its strength and resilience. The present study aims to explore the NPA–profitability relationship for the Indian banking sector, so as to determine the gravity of the impact that NPAs have on bank profitability. Further, other bank-specific, industry-specific and macroeconomic factors impacting banking profits have been taken under consideration. A balanced panel data set comprising 37 scheduled commercial banks of India over a time frame of 14 years (2005–2018) has been used for the purpose of required analysis. Conclusions have been drawn employing fixed effect and random effect panel regression models. Due to the presence of heteroskedasticity, results for robust standard error have been reported. A highly negative correlation exists between NPA and the two profitability measures return on assets (ROA) and return on equity (ROE). The results of this study have established NPA as the major detractor of banking industry’s profits because NPA carries the most negative regression coefficient which is highly significant. It implies that declining credit quality hampers banks’ performance and leads to their collapse.

scholarly journals Examination of Bank-Specific and Macroeconomic Determinants of Islamic Banks Profitability in Bangladesh: A Panel Data Approach

2018 ◽  
Vol 8 (11) ◽  
pp. 405-417
Author(s):  
Muhammad Enamul Haque ◽  
Nusrat Farzana
Keyword(s):  
Panel Data ◽  
Banking System ◽  
Operating Efficiency ◽  
Islamic Banks ◽  
Return On Assets ◽  
Bank Profitability ◽  
Return On Equity ◽  
Market Shares ◽  
Highly Correlated ◽  
Macroeconomic Determinants

Islamic banks have continued to demonstrate tremendous growth over the last decade as reflected by its increasing market shares in terms of deposits and investments compared to the total banking system. This study makes an effort to examine the bank-specific and macroeconomic determinants of eight full-fledged Islamic banks profitability in Bangladesh applying two static linear panel data approaches. The study uses return on assets, return on equity and net investment margin as measures of profitability. The results indicate that bank-specific variables such as capital to risk based assets, liquidity, bank size, and operating efficiency are highly correlated with Islamic banks profitability. Both the macroeconomic variables are found to be statistically nugatory and do not have any influence to affect the Islamic bank profitability.

Does Bank Profitability Stimulate Economic Growth in the Arab Region?

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Omar Ghazy Aziz
Keyword(s):  
Financial Development ◽  
Method Of Moments ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Arab Countries ◽  
Return On Assets ◽  
Bank Profitability ◽  
Arab Region ◽  
Return On Equity ◽  
The Impact

AbstractThis study empirically investigates the impact of bank profitability, as a complementary measure of financial development, on growth in the Arab countries between 1985 and 2016. Using a generalized method of moments (GMM) estimation to test the impact of the bank profitability on growth, this study utilises two variables in the econometric model which are return on assets and return on equity. This study reveals that both variables of bank profitability are positive and significant. This confirms that the bank profitability, beside other financial development variables, has positive impact on the growth. This study points out some important implications based on this result.

scholarly journals Corporate Governance, Political Connections, and Bank Performance

2019 ◽  
Vol 7 (4) ◽  
pp. 62 ◽  
Author(s):  
Haris ◽  
Yao ◽  
Tariq ◽  
Javaid ◽  
Ain
Keyword(s):  
Corporate Governance ◽  
Profit Margin ◽  
Political Connections ◽  
Return On Assets ◽  
Board Size ◽  
Bank Profitability ◽  
Return On Equity ◽  
Net Interest Margin ◽  
The Impact ◽  
Interest Margin

This study investigates the impact of corporate governance characteristics and political connections of directors on the profitability of banks in Pakistan. The study uses the data of 26 domestic banks over the latest and large period of 2007–2016. Our findings firstly affirm that bank profitability is negatively affected by the presence of politically connected directors on the board, reporting significantly lower return on assets, return on equity, net interest margin, and profit margin. Secondly, our findings also affirm the negative political influence on the sustainability of the banking industry, reporting significantly lower return on assets, return on equity, net interest margin, and profit margin during the government transition of banks having politically connected directors sitting on their board. Our findings further report an inverted U-shaped relationship between board size and bank profitability, suggesting that a board size beyond 8–9 members decreases the profitability. The study further finds a positive impact of board composition, board independence, and director compensation on bank profitability, while also finding a negative impact of frequent board meetings, presence of foreign directors, and audit committee independence.

scholarly journals Financial Performance and Income Diversity: Does Ownership Matter? Evidence from Vietnamese Commercial Banks

2020 ◽  
Vol 12 (8) ◽  
pp. 77
Author(s):  
Tin H. Ho
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Stock Exchange ◽  
Real Estate Market ◽  
State Ownership ◽  
Annual Data ◽  
Operating Income ◽  
Panel Regressions ◽  
Credit Shocks

In the context of the sharp development of the Vietnamese stock market in recent years, financial performance of listed firms is drawing the attention of investors, particularly in banking industry. Moreover, the harmony of income diversity or reducing the relying on traditional activities of commercial banks is thriving in the world and strongly influence on Vietnam&rsquo;s banking, especially when the outbreak of COVID-19 worldwide may result in the freeze of real estate market, which leads to devaluate collaterals as well as the risk of non-performing loans, so-called &ldquo;credit shocks&rdquo;. This paper, therefore, examines the impacts of income diversity on financial performance of Vietnamese commercial banks in the period from 2007 to 2019. To conduct this study, annual data are collected of 26 commercial banks, listed in Ho Chi Minh Stock Exchange (HOSE), Ha Noi Stock Exchange (HNX), UPCoM and OTC. The research develops an exploratory model reflecting financial performance of the banks in relation to their income diversity and analyzes data using panel regressions. The results show that there is no relationship between financial performance and income diversity due to its low proportion in total operating income. However, the state ownership makes stronger this relationship despite the small impacts. The findings are expected to add the gap in the existing literature, lacking of investigating the impacts of market power on bank income diversity, and the moderating role of state ownership in this relation in Vietnamese banking sector, which is ignored or opposite in most recent studies. Thereby, the paper also gives some useful implications for investors, bank managers as well as policy makers to catch up the market fluctuations.

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