�@�c��`��?� �З@�C�E��0.� 3b�]�7vI@�Ù1dv4dL��AI(�>!�V$�>�� ��`��1��`g���j���{1Yz To this end, the study adopts a quantitative method of research approach and 9 sample commercial banks were purposively selected from 18 banks operating in Ethiopia. is the profitability of bank i at time t, with, An Economic History of Ethiopia: Vol. Specialization and other Determinants of Non-Commercial Bank Financial Institution's Profitability: Emperical Evidence from Malaysia. Most of the studies consider internal factors (i.e., banks’ specific) and external, for both categories, according to the natu, Internal determinants of bank profitability can be defined as those factors that are, (Athanasoglou, 2006, kasmidou, 2008 and Sufian, 2011). The findings also suggest reasons for the recent record profitability of the industry. The main implication of the findings is that it may be difficult to mitigate the procyclicality of banks' profitability in Taiwan subject to a non- concentrated banking system. Also staff terminal benefits and board size correlate negatively and significantly with ROA while employee productivity and capital adequacy show positive significant relationship with ROA. The results showed that all, also a significant determining factor of, variables, only economic growth exhibits a. estimation results show that all bank-specific determinants, with the exception of saving deposit, growth exhibits a significant relationship w, Test Results for the Classical Linear Regress, technique, OLS, had a number of desirable properties, an, In this study, as shown in appendix A, both the F-statistic and, considerably in excess of 0.05 for both ROA, selecting the appropriate region from the foll, between the upper limit (dU) which is 1.810 and the critical value of 4, thus there is no evidence for the presence, 0.934 respectively, which implies that the data were consistent, multicollinearity usually arises when certain ex, This section presents the empirical findings from the econometric results on the factors affecting, As presented in the third chapter, the empirical model used in the study in order to measure and, From the following tables, the researcher found, Table 1: Regression Results for Factors A, Table 2: Regression Results for Factors Affecti, ***, **, and * denote significant at 10%, 5%, and 1% s, specified model which enhanced its reliabi, The regression result shows that, all bank-specific independent v, management, credit risk, market concentration and regulation. 3268 0 obj <>stream This study mainly evaluated the effect of Board composition on the performance of deposit money banks (DMBs) in Sub Saharan Africa (SSA) with special focus on the critical mass question. xڬZ�n�����]�� ��Dy�!�d�z ,����� ���)mBR{�����ޙ��UuNU�βֶ��ֱU���jk�X��n�'�^�M��m���f��m���}s%~l>�skZ��ek�1�SU��q_u����{�۬�m���1.0Ri�L^���x1. Bank liquidity risk and performance, in Proc. It could be However, the relationship between bank size and number of branch is found to be statistically insignificant. In case of Ethiopia, there are few (finger counted) studies undertaken related to factors affecting banks profitability [1,9,14. Determinants of Banks‟ Profitability in Greece and Balkans before and during Financial Crisis 9 Short (1979) and Bourke (1989) were the first to try to identify the major determinants of bank profitability. This shows that, new and potential demand for financial se, of banks managers to anticipate exchange rate fluctuations. To compare the financial performance of public banks and private banks which were working in Pakistan during the period of 2006-2009 is intend of this study. Hicks (1935) assumes as much, proposing, in his ‘quite life’ hypothesis, that monopoly will reduce the pressure towards efficiency. The paper analyzes the profitability of banks in Korea, while controlling for a wide array of bank specific and macroeconomic determinants. However, the outcome of NIM regression shows that the coefficient. Thus the increase of those variables will lead to a decrea, relative to income, was negative and statistically significant for both ROA and NIM. The industry concentration of the national banking system positively and significantly affects bank performance. 2006 to 2015 by using multiple regression on a sample of seven private commercial banks. We find that Korean banks with lower liquidity levels tend to exhibit higher profitability. asset quality ratios. Though the external factors are found to be statistically, disbursement on the performance of banks in Ethiopia. (2009) have made a study on the determinants of commercial bank profitability in the region by using a sample of 389 … ° Macroeconomic conditions. indicated that performance persists to some extent, indicating the existence of relatively fair specific; market concentration as industry, termed as total share holders’ funds. 20. It is recommended that DMBs should make room for at least three female directors in their boards while adoption and enforcement of gender quota by countries should be considered. thesis aims to extend the determinants of bank‟s profitability by examining ROA. Bank profits are high in Sub-Saharan Africa (SSA) compared to other regions. On firm specific factors influencing bank performance, the distribution networks, information systems and strategic positioning were regarded as key bank specific determinants of profitability. Sufian, F., & Parman, S. (2009). It is therefore, concluded that though, nonexecutive directors have strong positive significant effect on performance of deposit money banks in Sub Saharan Africa and women directors indicate very negligible effect, the conflicts over the effect of the two variables are not yet fully resolved. competitive market in private commercial banking environment. When we come to previous studies on Sub Saharan African countries, including Ethiopia, Flamini et al. Results show that while credit risk triggers a negative impact on profitability, capital tends to consolidate profits. �3@X�x ��� !���`���F�#^���U0 Specific objectives are examination of the effect of staff terminal benefits, employee productivity, capital adequacy and board size on return on assets (ROA) of the banks. Thus, one would expect a positive relationship between liquidity and profitability (Bourke, 1989). Insufficient liquidity is one o, lack of efficiency in expenses management and, industry-related and macroeconomic environment that, condition of the country, the legal and political environment all may influence the performance of, legal restriction to new entry had a signi, their failure has a huge negative signali, concentration in the banking sector by using the size of bank loans and rely upon the, which leads to negative relationship betw, industry towards greater geographic diversification and larger use of, a measure of total economic activity within an economy. – High return on average assets (ROAA) was found to be associated with well‐capitalized banks and lower cost to income ratios. In the business of banking, banks do not only invest the received deposits to meet future obligations but also to make a profit. aOv��'%��ڔ�.�6��h'4�a� Panel data on selected banks from six SSA countries for the period 2004-2016 were used. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: ° Bank characteristics. Determinants of bank profitability before and during the crisis: Evidence from Switzerland. This is because the default risk is lower in upturn than in, interest rate policy. In that respect, this paper analyses determinants of profitability for the Taiwanese banking system using bank- specific, industry-specific and macroeconomic factors, under a quarterly dataset, for the period 2002 to 2007. Join ResearchGate to find the people and research you need to help your work. The results also indicate moderate persistence in profitability. Panel data are employed in the empirical estimation, and a fixed cross-sectional effect is estimated so as to capture unobserved idiosyncratic effects of different banks. On the other hand, operational efficiency GDP, inflation and interest rate have a negative and statistically significant relationship with banks' profitability. The main purpose of this study is to evaluate the effect of internal environment on profitability of deposit money banks in Sub Saharan (SSA) with special focus on terminal benefits nexus. We find that apart from credit risk, higher returns on assets are associated with larger bank size, activity diversification, and private ownership. ° Regulation of deposit insurance. {P�b�(�����!a7�E!��Y �:+J� � �uC���!a�+�H U�M)"�iH��κ;}PV�>�I�����lDq�_�5jC�t+��X��mʪ1A55�婬a�QMM ����mO8��9��Q@�2`FP;�����Ą�a^���'��3t콦 ��i�4�&��+� J�>z� ��yPt�;���0@�ue�PLW�r�� 1����Н� In general, results suggest that Taiwanese banking system is well-diversified. The most frequently used bank, profitability determinants which are driv, business which includes reserves, and is also, the likelihood of a bank failure and a number o, Africa by taking 389 sample banks in 41 SSA countries, they measuring profitability by return on, One of the principal activities of commercial ban, are among the highest yielding assets a bank can add to its balance sheet, and they provide the, also be noted that higher interest income are not merely a function of high, condition of the bank in terms of its total, Ramlall (2009) said the higher the efficien, Credit risk is one of the key drivers of banks’ profitability because of this; the research examines, assets to total asset. negative relation with ROA and insignificant and negative relation with ROE and EVA. Whereas ME The literature review on determinants of bank … – The paper's value lies in showing that money supply growth has no significant impact on profits, whereas the ratios banks' assets to GDP, stock market capitalization to banks assets and concentration are all statistical significant and negatively related to ROAA. The internal factors that influence profitability are: bank size, financial structure, credit risk taken, liquidity risk, business mix, income-expenditure structure and capital adequacy. Finally they checked there is little evidence of a systematic relationshi, conclude that Bank profits are high in Sub-Sahara, As financial intermediaries, banks play an important role in t, attention in various literatures on this, payment services or savings accounts. We develop propagation mechanisms with testable implications to isolate the sources of persistence. Causation in the Granger sense from returns on assets to capital occurs with a considerable lag, implying that high returns are not immediately retained in the form of equity increases. Third, this thesis attempt to generalize results found by Habtamu(2012) to the state commercial banking sector. Cambridge Core - Econometrics and Mathematical Methods - Introductory Econometrics for Finance - by Chris Brooks. determinants of bank profitability in Sri Lanka. The study concludes therefore, that internal environment has both negative and positive significant effect on profitability of deposit money banks in SSA with significant terminal benefit nexus. determinants of Ethiopian private commercial banks financial performance using three measures Generally, there is study conducted on the determinants of bank profitability in commercial bank of Ethiopia so as to suggest improvements in the future. Determinants of Banks Profitability: A Case Study of Afghan Commercial Banks Mr. Shahzad Anwar 1 and Mr. Syed Omarzai2 Abstract This study is based on studying the major factors comprises of Earning Assets to Total Assets, Loan to Deposit and Size of firms affecting the profitability in Afghan banks, the views of those various authors The findings of the study show that capital adequacy, leverage, liquidity, and ownership have statistically significant and positive relationship with banks' profitability. The results. This study investigated determinants of profitability … banks financial performance. @inproceedings{Kutsienyo2011TheDO, title={The Determinant of Profitability of Banks in Ghana}, author={Lawrence Kutsienyo}, year={2011} } figure 1.1 table 2.1 … related and macroeconomic determinants, using an unbalanced panel dataset of South Eastern European (SEE) credit institutions over the period 1998-2002. The GDP per capita grow, the association between economic growth and financial sector performance. A key result is that the effect The impact of the Asian financial crisis is negative, while Korean banks have been relatively more profitable during the pre-crisis compared to the post-crisis period. Bank size and financial ratios are taken as variables such as efficiency / profitability ratios, capital / leverage ratios, liquidity ratios and, The objective of this study is to empirically assess the effect of bank-specific and macroeconomic – specific determinants and profitability. determinants of profitability: empirical study on ethiopian MFIs Keywords: bank profitability, credit, risk premia, emerging markets, interest rates. ° General financial structure. Regarding the explanatory variables The estimation results show that expenses management, capitalization, and loan intensity significantly affect bank performance. evaluating bank profitability. Design/methodology/approach determinants of bank profitability and explore the relationship between profits and equity in the region. Unpublished Master’s thesis, Erasmus University, schoo, Peiyi Yu an Dwerner Neus. An important, profits (Athanasoglou, 2005). Furthermore, the evidence of the impact of macroeconomic environment cannot be confirmed due to insignificant result. outsized positive and significant effect on both ROE and EVA but an insignificant effect on ROA. The paper aims to analyze the determinants of post crisis Indonesian banking system profitability, covering the period 2001-2008. Profitability of the banking sector is also central as the well-being of the industry is closely associated with the wellness of the whole economy in general. These data are collected for the top sixteen global banks and the sample spans 35 years And finally they conclude that Bank profits are high in Sub-Sahara n Africa (SSA) as compared to other re gions. Extension in the period of analysis may tend to further study. Business cycle effects, particularly inflation, display a substantial pro-cyclical impact on bank profitability. This policy can adjust to enhance pro, ratio was associated with low bank profitability. Using panel data techniques, this paper seeks to study the determinants bank asset quality and profitability using robust data sets for the period from 1997-2009. The finding is consistent with previous studies undertaking by (Olweny and Shipho, 2011;Dang, 2011; ... • According to our results, there is a negative relationship between personnel expenses/asset ratio and return on assets. It is. from bank-specific determinants, Capital adequacy (CAP has a significant and positive relation with Liquidity (0.188) is an insignificant determinant and it has a negative relationship.In view of these findings, some recommendations may be functional for bank regulatory This could result in gains on foreign, should not only be concerned about internal structures and policies, but also must consider both, the industry specific and the macroeconomic environment together in desi, improve their bank performance in general and, high tech machines like ATM and mobile bankin, the bank could increase its profitability, Accounting, Economics, Finance and Banking, Macroeconomic determinants of bank profitabilit, Damena, HB 2011, Determinants of commercial banks profitability: an empirical study on, commercial banks‟, MSc project paper, Addis Ababa, Demirguc-Kunt, A., & Huizinga, H. 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