Profitability Of Banking Industry Research Articles

The Effect of Non-Performing Loans on Sector Profitability in the Turkish Banking Sector

The main purpose of this study is to determine the impact of non-performing loans (NPLs) on profitability of banking industry in Turkiye. In this study, in order to examine the basic indicators of profitability, non-performing receivables and consumer credit cards, non-performing housing and vehicle loans, non-performing consumer loans, consumer loans, loans and credit cards, net profit-loss and non-performing loans were compiled to generate a data set for the period between 2004 and 2018. Due to the different integration levels of the series obtained, models based on the autoregressive distributed lag (ARDL) approach, which is one of the time series regression methods, were established to analyze. Then, the effect of non-performing receivables on the banking sector profitability was examined. The initial findings reveal that the increase in non-performing receivables significantly reduced the profit of the banking sector.

Effect of Non Performing Loans on Profitability of the Banking Industry in Kenya

Upsurge in the rate of non - performing loans in the Kenyan banking industry warranted a study to find out its effect on the profitability of the whole banking industry. The main objective of the study was to determine the effect of non - performing loans on the profitability of the banking industry in Kenya. A positivism research philosophy was adopted. The study used cross sectional and time series designs. Panel data about the Kenyan banking industry as a whole was incorporated in the study. Statistical package of social studies version 24.0 aided in data analysis. Pearson correlation and regression inferential statistical techniques were used in the study. The study found a strong negative relationship between nonperforming loans and profit after tax (r=-.754^**, p value <.01). Non – performing loans had a significant negative effect on profitability of the Kenyan banking industry (β=-.754, p=007, α<0.01). The value of adjusted R-square is 0.521 implying that 52.1% of total variation of profitability of the Kenyan banking industry is explained collectively by nonperforming loans. The study concluded that non- performing loans has a negative significant effect on profitability of the Kenyan banking industry. In order to hedge against upsurge in the rate of non - performing loans the banking industry should enforce effective regulation, create awareness, and curb unproductive borrowings. There must be multiple level of approval to sanction huge loans. Moreover, there should be transparent mechanism and proper disclosure regulation.

Determinants of Profitability in Banking Industry: A Case Study of Indonesia

The purpose of this study is to investigate the determinants of profitability in Indonesian banking industry. This research defines profitability as basic earning power (BEP) and return on equity (ROE) with variables like basic condition, market structure, banking characteristics and performance as its determinants. Both credit market and deposit market channel of Indonesian banking were used to analyze the data. The Structure-Conduct Performance (SCP) paradigm was used to offer theoretical perspective. Data was collected through purposive sampling technique, randomly picked from Indonesian banks financial statements during 2001-2014. The dynamic panel GMM-Arellanno Bond was used as the tool analysis. The results show that basic condition, market structure, banking characteristic, and performance significantly influence profitability. Based on this result, the study recommends that Indonesian banking segment should improve its market structure through enhancement of performance particularly that of individual banks. It also recommends that regulations and policy planning of national banking industry should be directed to retaining and increasing profitability without relying on market power, nor requiring collusion or high interest to get higher profit. The implication of the current research will be seen in judging the durability of bank profitability and finding means to make it strong enough despite the influence of crisis, money market and inflation, although it may be still sensitive to exchange rate volatility.

Analysis of The Effect of Capital, Credit Risk, and Liquidity Risk on Profitability in Banks

This research aims to analyze the influence of bank-specific component to profitability of banking industry within the classification of commercial banking category 3 (Bank Umum Kegiatan Usaha 3, classification based on Central Bank of Indonesia) in the period of 2011 until 2015. The number of sample for this research are 8 banks or Bank Devisa. Independent variable used for this research are based on the ratio of banks. There are Capital measured by Capital Adequacy Ratio, Credit Risk measured by Non Performing Loan, and Liquidity Risk measured by Loan to Deposit Ratio. While dependent variable Profitability measured by Return On Assets. This research analyzed using Eviews 7 program for Panel Data Regression. The result of this research shows that Capital and Liquidity Risk has insignificance effect to Profitability. Meanwhile, Credit Risk has significant effect to Profitability

CROSS-BORDER LOAN LIABILITY, THE EXCHANGE RATE AND PROFITABILITY IN THE TURKISH BANKING SECTOR

We examine how the cross border banking loan liabilities (syndication and securitization loans) and the exchange rate affect the Turkish banking industry profitability using a balanced panel data for the period 2003Q1-2016Q3. We study with different subsamples and model specifications. Overall, we find that the banking sector financial inflows are positively associated with bank profitability. Specifically, the results show that the banking sector cross border inflows have significant and positive impact on return on assets (ROA), return on equity (ROE) and on net interest margin (NIM). The long-term inflows play a more important role than the short-term inflows in explaining profitability in all specifications while short-term inflows have no any significant effect on these profitability indicators. Moreover, we show that the exchange rate has significant and negative impact on ROA and ROE and has insignificant effect on NIM. Our findings are more notable in private banks compared to the whole sample. Given the fact that the existing studies examine the banking profitability through aggregate capital inflows and maturity mismatch, this study will fill a meaningful gap in emerging market literature.

Evaluating the nationalization &amp;amp; privatization effect: a case of Indian banking industry

The facilitation of economic transactions and friendly investor environment is undertaken through effective performance of financial systems. Mobilization of savings and funding the profitable business opportunities are essential in improving the efficiency of intermediation. The study aims to evaluate the effects of nationalization and privatization on Indian banks. Various factors have been considered to examine the effects of privatization and nationalization, including sources of public sector inefficiency, measures of firm performance, econometric issues, and the mode of privatization. The data was collected for the period of 1998 to 2016 from Indian banks. Data Envelopment Analysis (DEA) was used to evaluate the financial reports of the banks selected to evaluate the efficiency of input and output variables. Positive results were observed, concerning the efficiency and profitability of banking industry after banks’ privatization. Performance of private banks has been observed effective and efficient as compared to the public sector banks. Privatization of banks must be increased and maintained to sustain the efficiency of the banks and implement strategies to maintain the assets. Future studies may recruit more appropriate sample size to evaluate the privatization and nationalization effects of Indian banking industry. Greater number of banks will provide more precise results, using data envelopment analysis.

The determinants of Serbian banking industry profitability

This article investigates the impact of bank-specific, market-specific and macroeconomic factors on the profitability of the banking sector in Serbia in the period 2004–2011. We use three panel datasets: for all banks in a sample and for domestic and foreign banks. The Hausman test was performed in order to test whether a fixed or a random effects model should be used in the regression analysis. The results are compared to the findings of previous research which was focused on EU countries. Moreover, the crisis effect on the profitability of banks in Serbia has been considered. The results show that bank-specific and market-specific factors have influence on bank profitability, but macroeconomic factors do not. We find that influence of liquidity ratio and a measure of financial development on profitability of banks are in contrast in Serbia compared to EU countries. The results also show that different factors influence profitability of domestic and foreign banks and that crisis has an opposite effect on profitability of domestic and foreign banks.

The Determinants of the Pakistan Islamic Banking Industry Profitability: Panel Evidence

he financial sector plays an important role in the economic and fiscal development of a country. A well-built and vigorous banking system is a precondition for the sustainable financial growth of a country. Over the past few years, Islamic banking industry of Pakistan has been facing many problems and challenges to maintain the financial stability. To overcome this issue, it is vital to classify the factors that mostly impact the overall profitability of Islamic banks in Pakistan. Two models were used alternatively for ROA and ROE as dependent variable. A set of internal factors were considered as independent variables including: bank‘s size, gearing ratio, operational efficiency, asset management and capital adequacy ratio for the time period 2006-2013. The results indicate that different measures of profitability depend upon different bank specific factors. The study found that profitability of Islamic banks depends on the leverage ratio, operating efficiency, asset management and bank size. Further research can be extended to explore the above findings and to include some other internal factors such as general bank charges, doubtful loans or reserves ratios, and external factor such as GDP, exchange rate and CPI as well.

Investigating the effects of issuance of bank debt guarantee on profitability of banking industry

Investigating the effects of issuance of bank debt guarantee on profitability of banking industry

The impact of electronic banking on profitability and market share: Evidence from banking industry

Article history: Received June 4, 2014 Accepted 29 October 2014 Available online November 8 2014 This paper presents an empirical investigation to study the effects of electronic banking devices such as automated telling machines (ATM), Point of sales (POS) and Pin Pad on profitability and market share in Iranian banking industry. The population of this study considers the information of 16 banks, five governmental and eleven private, over the period 2007-2012. Using two regression techniques, the study has detected that while Pin Pad may influence on return of assets positively, ATM and POS may not have any meaningful impact on profitability. Moreover, in our survey, none of technological facilities had a meaningful impact on market share but there was a positive and meaningful relationship between bank size and market share. Growing Science Ltd. All rights reserved. 4 © 201 Banking industry Profitability Market share Information technology

An Empirical Multivariate Analysis of the Banking Industry Performance in the UK and the USA in Conditions of the Global Financial Crisis

In this Dissertation the empirical results of the multivariate analysis of investigation of the key drivers of Banks performance and comparative analysis of the Banking industry profitability in the UK and the USA in the years preceding, during, and after global financial crisis - from 2005 to 2009 - are presented. The results of this research have been obtained from the application of empirical multivariate econometric model and multiple quantitative analytical approaches to solve complex research objectives. Empirical multivariate analysis has been performed to study the impact of 16 macroeconomic-, financial industry-, market- and Bank-specific determinants on the performance of the randomly selected 210 UK and USA Banks. The research has helped to disclose the main statistically significant determinants of Banks performance in the UK and the USA in years of financial stability and recent crisis. Two research hypotheses have been examined for their credibility and it has been confirmed, that composed empirical multivariate econometric model is valid and adequate, and that financial performance of the UK Banks is different from the performance of the USA Banks, in terms of ROE. The empirical results obtained helped to reveal the similarities as well as variations in Banks performance for two Banking industries and to suggest a new systemic analytical approach for the accessing the Banking system profitability in the UK and the USA.The findings of this research provide a deeper insight into the Banking industry performance and profitability in two globally recognized financial centres – the UK and the USA - in years before, during and after global financial crisis. This information contributes into revealing the factors determining the financial stability of banks.

Determinants of Banks Performance and Comparative Analysis of Banking Industry Profitability in Secondary Emerging-, Advanced Emerging- and Developed Market Countries

In current Dissertation are represented the empirical results of research investigation of determinants of Banks profitability (in terms of ROE) obtained by application of the multivariate empirical econometric regression model to study the Banks profitability and also the comparative analysis of Banking industry performance in seven countries representing three major financial markets: secondary emerging-, advanced emerging- and developed.On the base of results obtained it have been proved, that the impact of some of the independent variables composing empirical multivariate econometric model on dependent variable (ROE of Banks) in every market of scope are statistically significant. The research has helped to disclose the variability in main profitability determinants from market to market as well as from year to year. By ranking of the importance of each statistically significant determinant of Banks profitability has been clarified also the main factors, which provided impact on Banks’ ROE in years before- and during global recession and the first year of recovery. It has been revealed, that the financial performance of Banks in secondary emerging - and advanced emerging market countries in terms of their ROE is different from the performance of Banks in developed market countries. In current dissertation has been considered the theoretical predispositions for suggestion to use the quantile regression approach for the estimation of Banks performance in secondary emerging-, advanced emerging- and developed market countries. The persistence in high kurtosis as well as skewness has been revealed in annual returns for Banks in developed market country (the USA) in years preceding-, during- and after recent global crisis. On the base of empirical results obtained in Dissertation has been worked out the systemic approach to the evaluation of Banks performance in countries with different financial level of market development. The findings of current dissertation are contributing into the investigation of factors of Banks profitability and are adding more insight into the Banking Industry performance in secondary emerging-, advanced emerging- and developed market countries.

Investigating internal and external factors influencing profitability of banking industry

This paper presents an empirical investigation to learn the impact of some internal and external factors on profitability in banking system. The proposed model of this paper introduces three econometrics methods to study the behavior of internal, external and a combination of both factors on return on assets. The proposed study of this paper uses Vector Auto- Regressive (VAR) and Vector Error Correction Model (VECM) to provide estimation of the proposed model and we use historical data over the period of 1989-2010. The results of the first model for internal factors, we consider some independent variables including ratio of total revenue on total assets (TR) and ratio of total equities on total assets (TE). The second model considers the effects of external variables on ROA such as growth domestic product (GDP) and market share (MS) and the last model includes a combination of both internal and external factors. The results indicates that there is a positive and meaningful relationship between logarithm of growth domestic product and return on equities, which means as we expect one unit increase in LGDP, there is an increase of 0.012 on ROA. In addition, when the market share increase by one percent, there will be an increase 0.025% increase on ROA and an increase of one percent in the ratio of TR will yield to an increase of one percent in ROA.

An empirical study on the impact of operating risk on structure capital and profitability in Iranian banking sector

Article history: Received December 25, 2011 Received in Revised form March, 25, 2012 Accepted 24 April 2012 Available online April 29 2012 Banking system plays an important role in boosting the economy and when they become profitable, they could help industries more efficiently. The proposed study of this paper attempts to investigate the effects of operating risk and capital structure on profitability of banking industry. The proposed study of this paper includes 17 commercial banks, which were active from 2006 to 2010 in Iran and the results of the study indicate that although there was a positive relationship between capital structure and profitability but there was no meaningful relationship between operating risk and capital structure. In addition, the results of our study mention that operating risks negatively impacts profitability and economic figures do not have any influence on profitability, operating risks and capital structure. © 2012 Growing Science Ltd. All rights reserved.

An Assessment of the Determinants of the Nigerian Banking Industry Profitability Using Panel Evidence From Nigerian Commercial Banks

Prominent studies abroad which focused on the determinants of bank's interest margin and profitability have focused on whether banks in a particular country or panel have tended to exhibit different profit determinants and deposit behaviours. One question that these studies have not yet addressed is the actual determinants of bank profitability in Nigeria. Using the panel of respondents drawn randomly from 10 sampled banks based on their total deposit position at the entry point of the period of study 1996-2005, the study established that in Nigeria, the volume of operations more than any other factor determined the operating profits of commercial banks. The other factors include the level of market capitalisation, peer group ranking and combination of other important factors as determined by the tempo of the macro economic environment. This finding posed serious challenge to bank executives to identify important explanatory variables or determinants affecting their annual earnings to their forecast and build them into their chosen forecasting and profit planning models to improve forecast accuracy. The study calls for more commitment to trainings and model development based on the internal peculiarities of banks under study. The Information Manager Vol. 7 (2) 2007: pp. 14-20