Abstract
Marketing personnel are always under pressure to justify their marketing strategies expenses to bank top management and shareholders. This study aims to provide some justification for their expenses by linking it to the financial performance of the firm. Using the data of ten Kuwaiti banks that are listed at Kuwait stock exchange (KSE) over the period spanning from 2008 to 2018, results show that there is a statistically significant direct relation between marketing expenditure and the financial performance of banks in Kuwait. In addition, results show that both bank size and assets per employee also have a direct relation with bank performance.
 
 JEL: G21; G24; G10
 
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Highlights
The need to gauge the marketing expenditure impact on bank’s financial performance has been intensified as banks feel increasing pressure to justify their marketing expenditures to their stakeholders (Gruca and Rego 2005; Rust et al, 2004)
This study mainly attempts to examine marketing expenditure effect on the financial performance of ten banks listed at Kuwait stock exchange (KSE) over the period 2008 to 2018
Where return on assets (ROA) is the proxy of financial performance, which is used as dependent variable, X1, X2, X3, X4, X5, X6 are the natural logarithm number of ATM machines, the natural logarithm of number of bank branches, the natural logarithm of number of staff, the natural logarithm of advertisement expenses, the natural logarithm of bank’s total assets, and the natural logarithm of assets per employees respectively that are used as independent variables
Summary
The need to gauge the marketing expenditure impact on bank’s financial performance has been intensified as banks feel increasing pressure to justify their marketing expenditures to their stakeholders (Gruca and Rego 2005; Rust et al, 2004). While there were many attempts by researchers to examine the effect of marketing on the financial performance of firms, these researches showed conflicted results. Results showed positive relationship between promotional strategies and performance. They added that bank adopting different promotional and marketing strategies lead to diverse levels of growth. Mullineaux and Pyles (2010) studied the effect of U.S banks investments in advertising and promotion on their performance in the areas of profits and market share. Acar and Temiz (2017) studied the effect of marketing expenditure on the financial performance of 51 Turkish banks over the period 2007 to 2015. Results revealed that marketing expenditure showed a direct effect on the financial performance of banks. Marketing is an ongoing process, according to Abdel-Khalik (1975) when studying the effect of marketing on sales in different industries, namely, food, drug, cosmetics, soap, cleansers, tobacco and auto, found that advertisement showed a cumulative decay effect on sales
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