scholarly journals Can Ratios Predict the Financial Performance in Banks: A Case of National Banks in United Arab Emirates (U.A.E)

2018 ◽  
Vol 8 (4) ◽  
pp. 227 ◽  
Author(s):  
Arindam Banerjee
Keyword(s):  
Financial Performance ◽  
United Arab Emirates ◽  
Asset Management ◽  
Commercial Banks ◽  
Banking Sector ◽  
Gap Analysis ◽  
Future Trend ◽  
Return On Assets ◽  
The Future ◽  
The Impact

A country’s banking sector plays a dominant and important role in its financial growth and economic progress. The prime objective of this research paper is aimed towards evaluating the performance of 12 selected banks in United Arab Emirates (UAE) through various financial ratios. The paper highlights the various financial parameters such as adequacy of risk based capital, credit growth, concentration of credit, non performing position of loans, liquidity gap analysis, liquidity ratios, return on assets, return on equity, net interest margin in analysing the financial performance of the selected banks. The analysis of ratio helps to develop an insight to the extent the various financial variable impact the profitability and the productivity of the selected National Commercial Banks in U.A.E. The purpose of this paper is to examine the future financial performance of selected U.A.E National commercial banks using three indicators; Internal–based performance measured by Return on Assets, Market-based performance measured by Tobin’s Q model (Price / Book value of Equity) and Economic–based performance measured by Economic Value add. The financial data has been adopted from the audited financial statements of the sampled banks for the period of 2014 till 2017. Statistical tools used in the study include multiple regression analysis that captures the impact of the individual size of the bank, the credit risk, efficiency in operations and the asset management on the financial performance followed by forecasting the Future Trend.

scholarly journals The Impact of Capital Adequacy Ratio (CAR) on Islamic Banks’ Performance in Selected MENA Countries

2021 ◽  
pp. 116-133
Author(s):  
ADEL Z. A. ALNAJJAR ◽  
Anwar Hasan Abdullah Othman
Keyword(s):  
United Arab Emirates ◽  
Commercial Banks ◽  
Banking Sector ◽  
Capital Adequacy ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
Mena Countries ◽  
Capital Adequacy Ratio ◽  
The Impact

A strong capital adequacy ratio is crucial to a financial institution's success and helps it to survive any potential financial crisis. From Q1 2017 to Q4 2019, the influence of the Capital Adequacy Ratio (CAR) on the performance of Commercial Islamic Banks in MENA nations (Qatar, Oman, Bahrain, Kuwait, United Arab Emirates, Saudi Arabia, and Jordan) is examined. The performance measures utilized in this study are Return on Assets (ROA) and Return on Equity (ROE). The study's sample frame comprises all Islamic commercial banks in the designated MENA nations, with a sample size of 18 Islamic commercial banks. Panel data, fixed and random models, are applied in this study since there are multiple entities and time series. The findings of the study showed that the selected Islamic banks are committed to Capital Adequacy Ratio (CAR) which is defined under Basel III. This is considered the largest percentage regulated by the Basel Committee. The study also found that there is a statistically negative significant influence of CAR on both performance indicators ROE and ROA in the commercial Islamic banks in the selected MENA countries. The results of the study can be useful to a policymaker or decision-makers in the Islamic Banks industry. First, the research could be a reference to financial regulators such as central banks which may use the findings to provide regulation on optimal capital levels for local banks in terms of regulations, deregulations, and financial disruption. Next, the practice implications in the Islamic banking sector will provide them with insight as to how a bank’s capital influences its earnings. Hence, management can work towards attaining an optimal structure that maximizes their performance as well as identifying “best” and “worst” practices associated with capitalization levels.

scholarly journals Financial Performance of Commercial Banks: The Case of Kyrgyz Republic

2015 ◽  
Author(s):  
Adilya Yamaltdinova ◽  
Burulcha Sulaimanova
Keyword(s):  
Regression Analysis ◽  
Credit Risk ◽  
Financial Performance ◽  
Asset Management ◽  
Commercial Banks ◽  
Goodness Of Fit ◽  
Banking Sector ◽  
Kyrgyz Republic ◽  
Return On Assets ◽  
Explanatory Variables

The banking sector of Kyrgyz Republic is mainly presented by commercial banks and increase of their financial performance will lead to improve their functions and activities. For this reason, the aim of this research is set as to empirically investigate the financial performance of commercial banks of Kyrgyz Republic for the period of 2008-2014. The financial performance measured by using one indicator, this is Return on Assets. This indicator will be estimated by multiple regression analysis, with explanatory variables, such as bank size, credit risk, operational efficiency and asset management. The model is checked for goodness-of-fit and classical linear model assumptions.

scholarly journals The impact of discretionary loan loss provision of sharia financing on financial performance

2019 ◽  
Vol 14 (4) ◽  
pp. 34-41
Author(s):  
Z Zulfikar ◽  
Wahyuni Sri
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Structural Equation ◽  
Equation Modeling ◽  
Loan Loss ◽  
Return On Assets ◽  
Operating Income ◽  
Loan Loss Provision ◽  
Loan Loss Provisions ◽  
The Impact

This study aims to investigate the role of discretionary loan loss provision of sharia financing on the Islamic commercial banks’ financial performance in Indonesia. Partial Least Squares-Structural Equation modeling (PLS-SEM) is used to examine the relationship between loan loss provisions and financial performance in 13 Islamic commercial banks for 4.5 years. The analysis of the outer model shows that the probability of default and loss given default are determinants of loan loss provision, while financial performance is determined by return on assets, non-performing financing, net operating margin, and operating costs on operating income. The results of this study indicate that loan loss provisions have a direct effect on financial performance. Further investigation shows that the return on sharia financing contributes to increasing the impact of loan loss provisions on financial performance (indirect influence). The findings contribute to the literature by showing that discretionary loan loss provision can occur in sharia financing. The study is very important in terms of awareness of management behavior related to financial performance. The study has implications for management policies related to the prerequisites of potential clients.

scholarly journals The Impact of Corporate Governance on Profitability of Conventional Banks Operating in Pakistan

2020 ◽  
Vol 1 (4) ◽  
pp. 260-267
Author(s):  
Hafiz Muhammad Naveed ◽  
Shoaib Ali ◽  
Yao Hongxing ◽  
Saqib Altaf ◽  
Jan Muhammad Sohu
Keyword(s):  
Corporate Governance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Board Independence ◽  
Return On Assets ◽  
Board Size ◽  
Return On Equity ◽  
Board Directors ◽  
Conventional Banks ◽  
The Impact

The key purpose of present research study to examine the association among corporate governance and profitability banks in developing counties. For such primary objective, annually based data collected from 2004 to 2016. The data taken from annual financial reports which issued by conventional banks.  We have used ADF (Augmented Dickey Fuller) test to examine the unit-root of variables. Moreover, the multiple linear regression utilized for hypothetical estimation. The results indicates that corporate governance and conventional banks profitability of Pakistan are bidirectional (positive-negative) associated to each other. In addition, the board size (Board Directors) is negatively associated with Return on assets and return on equity of banks. Similarly, the board independence (Insider-Outsider Board Directors) is positively influenced to return on assets and return on equity of conventional banks of Pakistan. The overall findings shows that board size and board independence are highly associated with return on equity than return on assets. Moreover, banking sector in developing countries the board size should contain on appropriate strength and acquire more professional and qualified staff. An optimal number of directors in a board size there is a need of commercial banks as to increase the profitability. To enhance the investors’ confidence with the bank there is also a need of the commercial banks to increases the board independency.

scholarly journals The impact of credit risk management on the financial performance of United Arab Emirates commercial banks

2021 ◽  
Vol 10 (3) ◽  
pp. 303-319
Author(s):  
Jamil Salem Al Zaidanin ◽  
Omar Jamil Al Zaidanin
Keyword(s):  
Risk Management ◽  
Financial Performance ◽  
United Arab Emirates ◽  
Commercial Banks ◽  
Positive Impact ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Capital Adequacy Ratio ◽  
Income Ratio ◽  
The Impact

The main purpose of this study is to measure up to what extent the independent factors defined by capital adequacy ratio, non-performing loans ratio, cost-income ratio, liquidity ratio, and loans-to-deposits ratio impact the financial performance of sixteen commercial banks operating in the United Arab Emirates using panel data for the period of 2013-2019. The secondary data was collected from banks and examined by applying standard descriptive statistics and the random effect model for hypothesis testing. It is concluded from the regression outcomes that non-performing loans ratio and cost-income ratio have a significant negative impact on commercial banks profitability in the United Arab Emirates, while capital adequacy ratio, liquidity ratio, and loans -to-deposits ratio all have a very weak positive relationship on the return on assets but they are not determinants of bank’s profitability due to the insignificant statistical impact on it. It is therefore suggested that to enhance financial performance and minimize the risk of non-performing loans in the future, banks must watch very carefully the loans’ performance and analyze thoroughly the clients’ credit history and ability to pay back their debts prior to any approval of loan applications. Furthermore, banks should continuously improve their assets utilization, liquidity, and techniques of managing operating costs, improve the impact of capital adequacy, and the use of deposits for lending activities from a weak positive impact to a significant positive impact on their profitability. The researchers recommend that future studies on credit risk management influence on banks’ financial performance should consider more independent variables and longer periods of study such as twenty or thirty years to have more accuracy and generalized results.  

scholarly journals The Impact of Capital Structure on Jordanian Banks Performance

2021 ◽  
Vol 10 (1) ◽  
pp. 35
Author(s):  
Rania Al Omari
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Commercial Banks ◽  
Return On Investment ◽  
Stock Exchange ◽  
Return On Assets ◽  
Return On Equity ◽  
Total Debt ◽  
Amman Stock Exchange ◽  
The Impact

Due to the great importance of the financing structure of banks, the impact of capital structure on the financial performance of banks listed on the Amman Stock Exchange has been examined. To achieve the objectives of this study, we have followed the experimental approach. The study relied on financial variables. The Capital Structure has been measured by the ratios of total debt to total assets and total debt to total equity. Both ratios are independent variables. The dependent variable in this study is the financial performance of banks represented by the ratio of return on assets, the ratio of return on equity, the ratio of return on investment, and the ratio of return on share. The study community and sample consisted of twelve commercial banks listed on Amman Stock Exchange (ASE) during the period (2007-2017). Statistical Package for the Social Sciences (SPSS) software was used in testing of research hypotheses. The most important results are that the capital structure has an impact on return on assets (ROA), while it has no impact on return on equity (ROE), return on investment (ROI) and earnings per share (EPS) in Jordanian commercial banks.

scholarly journals Effect of E-customization Capability on Financial Performance of Commercial Banks in Kenya

2019 ◽  
Vol 8 (1) ◽  
pp. 10-20
Author(s):  
Morrisson Mutuku ◽  
Stephen Muathe ◽  
Rosemary James
Keyword(s):  
Data Analysis ◽  
Financial Performance ◽  
Commercial Banks ◽  
External Environment ◽  
Inferential Statistics ◽  
Return On Assets ◽  
Resource Based View ◽  
Online Registration ◽  
The Impact

Financial performance of a commercial banks driven by a number of capabilities drawn from either the internal or the external environment. The Kenyan Government and commercial banks in particular have invested in e-commerce solution. Despite these invetments over the years, the impact is yet to be felt. The empirical literure reveals that there is a link between commercial banks e-commerce custiomization capability and financial peroformance.The study empirically analyzed the effect of e- commerce customization capability on financial performance of commercial banks in Kenya. E-commerce customization capability measured using online registration,online recommendation and realtime support while financial performance was measured using Return on Assets (ROA). The study was anchored on the Resource-Based View Theory. The study used explanatory design. A census of 43 commercial banks was taken; data for performance was extracted from audited banks statements for financial year 2016/2017. Data for e-commerce customization capability was collected from commercial banks websites. Data for financial performance was extracted from audited financial ststements of commercial banks. Data analysis was done using descriptive and inferential statistics. The study findings indicated that e-commerce customization capability had a significant effect on financial performance of commercial banks in Kenya. The study concluded that e-commerce customization capability significantly affected financial performance of commercial banks in Kneya. The study recommends that the management of commercial banks in Kenya should invest more in customization capability to improve their performance.

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 Board Size, Board Composition and Performance: An Investigation on Turkish Banks

2016 ◽  
Vol 9 (2) ◽  
pp. 74 ◽  
Author(s):  
Ozcan ISIK ◽  
Ali Riza INCE
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Fixed Effects ◽  
Board Composition ◽  
Outside Directors ◽  
Return On Assets ◽  
Board Size ◽  
Net Interest Margin ◽  
Fixed Effects Regression ◽  
The Impact

<p>We investigate the impact of board size and board composition on performance for a sample of 30 commercial banks from 2008 to 2012 in Turkey. We measure bank performance by two alternative measures widely used in the banking literature, i.e. operating return on assets (OROA) and return on assets (ROA). Controlling for bank size, credit risk, liquidity risk, net interest margin and non-interest income, the results of panel fixed effects regression suggest that board size has a significantly positive effect on bank’s financial performance. This means that Turkish commercial banks may improve their financial performance by increasing their board size. Our findings, however, show clearly that there is no significant relationship between board composition (ratio of outside directors on the board) and banks’ financial performance.</p>

scholarly journals Modelling the Impact of Liquidity Trend on the Financial Performance of Commercial Banks and Economic Growth in Cameroon

2017 ◽  
Vol 8 (3) ◽  
pp. 121
Author(s):  
Godfrey Forgha Njimanted ◽  
Akume Daniel Akume ◽  
Nkwetta Ajong Aquilas
Keyword(s):  
Economic Growth ◽  
Financial Performance ◽  
Commercial Banks ◽  
Secondary Data ◽  
Regulatory Control ◽  
Return On Assets ◽  
Positive Effects ◽  
Maturity Mismatch ◽  
Excess Liquidity ◽  
The Impact

Recent year statistics have revealed the build-up of excess liquidity in Cameroonian commercial banks for more than two decades now. This has led to renewed interest in liquidity management, as it has implications on the financial performance of commercial banks. This paper is therefore designed to examine the impact of excess liquidity on the financial performance of commercial banks in Cameroon. Using Return on Assets (ROA) as proxy for the measurement of financial performance, secondary data from 1990 to 2016, with the application of the VAR technique, the findings reveals that excess liquidity and total liquid outflows affect ROA negatively. Gross domestic product, interest rate gap, total liquid inflows and previous year ROA had positive effects on ROA. Also from the empirical findings, there is an existing significant negative chain between excess liquidity, commercial bank performance and economic growth in Cameroon based on the Koyck Geometric lag reasoning. To address the negative vicious cycle chain, we therefore recommend guided minimum and maximum liquidity regulatory control and government effort geared towards encouraging moral suasions and special directive of investment by commercial banks in the agricultural, industrial and the educational sectors in Cameroon. Also, commercial banks should set maturity mismatch limits appropriate to the size of excess liquidity observed in each bank. Attempt to reverse the chain is part of the assurance to Cameroon emergence by 2035.

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