Profitability Of Commercial Banks Research Articles

THE INFLUENCE OF GREEN BANKING IMPLEMENTATION, ISLAMIC SOCIAL REPORTING AND COVID-19 CRISIS ON PROFITABILITY WITH BANK SIZE AS A MODERATING VARIABLE IN ISLAMIC GENERAL BANK PERIOD 2016-2023

This study uses bank size as a moderating variable to examine the effects of the Covid-19 crisis, Islamic social reporting, and the deployment of green banking on profitability in Indonesian Islamic commercial banks. In this work, panel data regression and moderated regression analysis are used as data analysis methods. Eleven Indonesian Islamic commercial banks that were registered with the OJK between 2016 and 2023 used as the study's sample. The study's findings show that Islamic commercial banks' profitability is significantly and favorably impacted by ISR. Profitability (ROE) is significantly impacted negatively by the Covid-19 situation, but not ROA. In the meantime, Islamic commercial banks' profitability is unaffected by green banking. The association between green banking and profitability may be moderated by the moderating variable of bank size. This research highlights how crucial risk management, responsibility, and openness are in a period of unpredictable economic times. In the context of Islamic banking, the impact of ISR procedures and reactions to financial crises like COVID-19 is quite significant. Islamic banks should see an improvement in their financial performance in the future by strengthening their ISR management and comprehending the implications of green banking.

The Impact of Inflation on Commercial Banks in China

Abstract: Inflation is an important issue that affects the profitability and operational stability of commercial banks. Conducting an in-depth analysis of these influences while putting forward effective countermeasures can be beneficial to ensuring the stable operation of commercial banks. This paper focuses on the period from 1937 to 1949 where the Second Sino-Japanese War and the Chinese Civil War, which had contributed to severe inflation and disrupted the banking sector, and the formation of the modern Chinese banking system. This study critically examines the main causes behind inflation, evaluates their implications on the functioning of commercial banks. It also assesses both the positive and negative impacts on commercial banks, pointing out the challenges commercial banks face during different periods. For example, the market turmoil and policy changes in the 1940s have made it difficult for commercial banks to retain normal operation; therefore are suffering from making profits and inflation has made the situation even worse. In addition, this paper provides short-run and long-run strategies for reducing the negative effects of inflation, with consideration of Chinas unique economic structure and historical context. By integrating insights from historical and contemporary perspectives, this analysis aims to offer valuable views on the micro and macro impacts inflation could bring.

Sharia Compliance And Intellectual Capital Toward Protability Of Islamic Commercial Banks In Indonesia

This study aims to analyze the effect of sharia compliance (SC) proxied by profit sharing ratio (PSR), zakat performance ratio (ZPR), Islamic income ratio (IsIR), directors-employees welfare ratio (DEWR), and intellectual capital (IC) on profitability (return on assets-ROA) of Islamic commercial banks (ICB) in Indonesia. The population of this study was 13 Islamic commercial banks in Indonesia registered with the Financial Services Authority (FSA). The sample was selected using purposive sampling, so 8 ICB were obtained for the study. The data source used is secondary data from each ICB in Indonesia's annual report for 2019-2023. Data analysis uses panel data regression with an analysis tool in the form of Eviews Version 12.0. The results of the study show that PSR positively affects ROA. ZPR and DEWR negatively affect ROA. However, IsIR and IC do not affect ROA. The implications of this study can complement existing theories and be a reference for further research. In practice, this research can be used as reference material for Islamic banking in optimizing performance, evaluating banking to create competitive advantage values, and identifying assessments in decision-making for the community.

Bank-specific and Macroeconomic Determinants of Commercial Banks Profitability in Kenya

This study focuses and examines the impact of bank-specific factors and macroeconomic determinants on the financial performance of commercial banks listed on the Nairobi Securities Exchange (NSE) during the period spanning from 2011 to 2020. The research is anchored on transaction cost economic theory with financial panel data methodology. In the pursuit of study objective, the study employed pooled ordinary least squares (OLS) estimation method combined with fixed effect model to account for individual-specific characteristics that may not be directly observable but are likely to impact the dependent variable. The research findings reveal that bank assets, bank capital and debt ratio have a positive impact on bank profitability while bank concentration has a negative effect. Notably, inflation rate, lending rate and tax rate were insignificant in relation to rate of return on equity among the selected banks in NSE. The study recommends that banks should prioritize efficient capital allocation and diversify their business lines and offerings. Therefore, banks should give thought to the implementation of strategic asset management as a means to optimize their asset allocation, as it can contribute to increased profitability through diversification and efficient asset utilization.

Assessing the Effect of Strategic Alliances on Organizational Performance of Commercial Banks in Nigeria

This study was carried out to examine the effect of Strategic Alliances on Organizational performance of commercial banks in Nigeria. The study adopted a cross-sectional survey design with primary data generated through self-administered questionnaire. The population for this study was five (5) commercial banks in South-South, Nigeria. The study however focused mainly on their regional offices located in Asaba, Delta State, Nigeria. Six regional managers for each bank were used as the study respondents giving a total of 30 respondents. Census sampling was adopted since the study sample was small. The reliability of the instrument was achieved by the use of the Cronbach Alpha with all the items scoring alpha coefficient above 0.70. The hypotheses were tested using the spearman rankorder correlation co-efficient with the aid ofstatistical package for social sciences (SPSS). The tests were carried out at a 95% confidence interval and a 0.05 level of significance. The study findings revealed that there is a significant relationship between strategic alliances on revenue performance, cost efficiency performance and on the profitability of commercial banks in South-South, Nigeria. The study recommends that commercial banks should invest in modern technologies to effectively integrate all the banks functions and activities to minimize operational costs. The top management team should invest more on financial innovations so that customers will have a wide scope of banking products to choose from leading to customer satisfaction and improve value addition which in turn enhances financial performance.

The impact of fintech on the profitability of Chinese commercial banks

This study assesses the transformative impact of financial technology (fintech) on the profitability of Chinese commercial banks, with a focus on addressing the challenge of endogeneity in financial data analysis. The study uses the systematic generalized method of moments (GMM) to compare the results with those from fixed-effects models in order to make the findings more reliable. The results reveal that fintech significantly impacts bank profitability, predominantly in a negative manner. This underscores the pressing need for banks to adapt and innovate, responding proactively to the fintech disruption. The practical implications of this study suggest that banks should not only invest in research and development within fintech but also tailor strategic responses according to bank types and establish a comprehensive financial services ecosystem to bolster their competitive edge and profitability. The findings are critical for bank executives and policymakers aiming to navigate the challenges posed by fintech innovations.

The Influence of Loan at Risk and Bank Spesific Variables on The Profitability of Commercial Banking in Indonesia Based on Core Capital: Period 2015 to 2022

This research aims to examine the influence of loan at risk (LAR) and other specific bank variables, namely size, leverage, and capital, on the profitability of commercial banks in Indonesia based on the classification of core capital set by banking authorities. The study utilizes panel data regression with a balanced fixed-effect model from a sample of 67 examined commercial banks, both in aggregate and based on the core capital classification of each bank, covering the research period from 2015 to 2022. The results indicate that the credit asset portfolio with LAR quality significantly affects the profitability of commercial banks negatively, both in terms of ROA and ROE, applying to the entire group of commercial banks studied. Meanwhile, other specific variables have varying degrees of influence and significance. Collectively, the independent variables in all research models have a significant impact on the profitability of all commercial banks in Indonesia. The findings of this study can contribute to the reference for bank management and other stakeholders in assessing the profitability performance of commercial banks, as well as expanding the literature in the field of banking.

Impact of Capital Structure on Profitability of Commercial Banks in Tanzania

This paper aims to examine the impact of capital structure on the profitability of commercial banks in Tanzania using panel data from 2017to 2021. Specifically, the study wants to investigate the impact debt and equity in capital structure on profitability of commercial banks in Tanzania. The study employed panel data research design and used secondary data which were extracted from audited financial statements of commercial banks. Return on assets was used as the dependent variables while independent variables were debt and equity capital as well as the debt-equity ratio. Result from the analysis indicates that initially the variables were not normally distributed which necessitate normalization of variables. Correlation analysis was performed and there was no multicollinearity problem between the variables. Based on Hausman test fixed effect model was selected as the appropriate model. The results from the analysis showed that 1% increase in debt capital increases profitability of commercial bank by 16.79%. The positive debt-profitability coefficient implies opportunities for enhancing profitability of commercial bank through debt financing. Result further revealed that 1 % increase in debt-equity ratio is associated with 18.07% decline in profitability. Which implies negative relationship between debt-equity ratio and profitability. On the other hand, increase in equity finance is associated with decline in profitability holding other factors constant. However, the study recommends a comprehensive assessment and consideration of situational factors while carrying out capital structure decision inverse relationship between debt-equity ratio also implies that excessive debt may pose financial risk and make the company less attractive to potential investors.

Effect of Capital Adequacy, Bank Size and Lending Interest Rate on Profitability of Commercial Banks in Nepal

Purpose : This study aims to examine the effect of capital adequacy, bank size and lending interest rate on the profitability of commercial banks in Nepal.Methods: This research used a combination of descriptive and causal comparative research design using secondary source of data obtained from the annual report of corresponding commercial banks. A panel data from the fiscal year 2013/14 to 2022/23 were obtained from six randomly selected commercial banks. Results: The capital adequacy ratio exhibits a significant positive impact on ROA signifying that a robust capital base strengthens financial stability, lowers funding costs, and promotes profitable lending operations. The analysis reveals that bank size has negative effect on ROA but the effect is insignificant suggesting that variations in size do not substantially influence profitability, implying that other determinants are more critical in shaping financial performance. Furthermore, the results indicate a significant negative effect of lending interest rates on return on assets (ROA), which are attributed to factors such as increased borrower repayment capacity, reduced loan demand, higher non-performing loan risks, and elevated funding costs negatively impact overall bank profitability Conclusion: Capital adequacy ratio plays a critical role in increasing bank profitability. Other factors such as bank size and lending interest rates need to be managed to optimize financial performance. Future research is necessary to explore these relationships in more diverse banking environments and consider additional variables to further understand the drivers of bank profitability.

Pengaruh Adopsi Financial Technology Terhadap Profitabilitas Bank Umum Konvensional yang Terdaftar di Otoritas Jasa Keuangan Periode 2017-2022

This research aims to analyse the effect of financial technology (fintech) adoption on the profitability of conventional commercial banks registered with the Financial Services Authority for the period 2017-2022. This research is an associative research with a quantitative approach. The data collection method is a survey sample. The population in the study amounted to 93 banks. By using purposive sampling technique, 5 bank samples were obtained (30 observation data). Fintech services in this study are measured using Automated Teller Machine (ATM), internet banking and mobile banking. While profitability is measured using Return On Asset (ROA). The panel data analysis method in this research is multiple linear regression analysis using Eviews version 12. The results of this research indicate that Automated Teller Machine (ATM) has a positive and insignificant effect on ROA, internet banking has a negative and insignificant effect on ROA and mobile banking has a positive and significant effect on ROA.

Empirical research on the impact of green credit development on the profitability of commercial banks

This paper examines empirical research on the impact of green credit development on commercial banks’ probability. To promote the green transformation of the economy, the efficient use of resources, and the effective improvement of the ecological environment, it is necessary to vigorously promote the comprehensive development of green finance and the continuous improvement of the green financial system. In terms of improving the green financial system, efforts can start with green credit. This paper uses related data from 10 Chinese listed commercial banks from 2012 to 2020 as panel data, and employs Stata software for empirical research and analysis. The final empirical results show that launching a green credit business may, in the short term, lead to a decrease in the bank's profitability. The reason for this result may be that China has started developing green finance relatively late and for a shorter duration, so the time and number of entities selected for data are very limited. Moreover, the expansion of the green credit business means that while suppressing "two highs and one surplus" enterprises, it also leads to a significant reduction in their loans, thus affecting the profitability of commercial banks. Ultimately, we propose targeted suggestions that align with China’s national conditions and enhance the green credit system.

The Influence of Murabahah, Musyarakah, Mudharabah and Qardh on the Profitability of Islamic Commercial Banks

This research aims to determine how the effect of Murabahah, Musyarakah, Mudharabah and Qardh financing on profitability at Islamic Commercial Banks for the period 2017-2021. The research method used in this research is quantitative research method. The data collection method was carried out through documentation using secondary data taken from the financial statements of each Islamic commercial bank in 2017-2021. The sampling method used purposive sampling technique with the analysis technique used was multiple linear regression using the SPSS version 26 application. The results showed that none of the Murabahah variables had an effect on profitability. Musyarakah variable has a negative and significant effect on profitability. Meanwhile, Mudharabah and Qardh variables have a positive and significant effect on profitability. The managerial implication is that Murabahah as the type of financing most often used by Islamic banks provides a relatively stable fixed income because it uses the principle of a fixed margin agreed upon in advance. Musharakah involves joint capital participation between the bank and the customer, where the bank gets a share of the profits or bears the losses according to the agreement. The bank acts as the capital owner (shahibul maal) who hands over funds to the business manager (mudharib) and gets a share of the profits.

Does External Fintech Collaboration Improve the Profitability of Commercial Banks? - Micro-evidence from China's Listed Commercial Banks

Does External Fintech Collaboration Improve the Profitability of Commercial Banks? - Micro-evidence from China's Listed Commercial Banks

Credit Risk Management and Profitability of Nepalese Commercial Banks

Banks are an essential component in the economy in the process of creating economic growth in both developed and developing countries. In order to contribute to its commitment to promote growth, banks should be able to lock in on the stability of their financial performance. This study has examined the relationship of credit risk management on performance of Nepalese commercial banks. The descriptive, Correlational research design and review have been adopted for the study. The pooled data of ten commercial banks out of total population of twenty commercial banks operating up to January 2024 has been analyzed. The findings indicate that specific financial indicators, such as credit to deposit ratio, non-performing loan, and interest spread rate, play crucial roles in influencing ROA and ROE. Major issue on non-performing loan and impairment cost were highlighted. Identified that gross domestic product growth rate has an insignificant positive impact on profitability of commercial banks in Nepal. These insights contribute to a deeper understanding of the dynamics within the banking sector, offering valuable implications for stakeholders and policymakers.

Analysis of Banking Risk Effect on The Profitability of Islamic Commercial Banks in Indonesia

This research aims to analyze the effect of banking risk consisting of credit risk, liquidity risk and operational risk on banking profitability. Credit risk is proxied by Net Performing Finance (NPF), liquidity risk is proxied by Finance to Deposit Ratio (FDR), and operational risk is proxied by Operating Expenses and Operating Income (BOPO), while Net Returns measure profitability. The method used is panel data analysis with the Gretl application using data from Islamic Commercial Banks in Indonesia that meet specific criteria. The data observation period is from quarter 4 of 2013 to quarter 3 of 2023, so there are 200 observations. The research results show that credit risk and operational risk significantly negatively affected profitability, while liquidity risk had no effect. This research implies that Islamic banking should channel the funds that have been successfully collected to be distributed to debtors, especially those operating on an MSME scale so that the level of banking liquidity risk can be more stable and prospect to have an impact on increasing banking profitability.

Tác động của hoạt động tạo thanh khoản đến khả năng sinh lợi của các ngân hàng thương mại Việt Nam

This study investigates the effect of liquidity creation activities on the profitability of Vietnamese commercial banks. The research sample includes 308 observations from 28 commercial banks in Vietnam from 2012 to 2022. The estimated results from models with random effects (REM), fixed effects (FEM), and feasible generalized least squares (FGLS) show that liquidity creation (LC) has a negative impact on the profitability of commercial banks in Vietnam. Further analysis shows that liquidity creation on the asset side (LCA), liquidity creation on the liability and equity sides (LCC), and liquidity creation on the off-balance sheet side (LCOBS) have a negative effect on the profitability ratio of Vietnamese commercial banks. This study provides some policy implications for bank managers regarding profit maximization strategies in Vietnamese commercial banks

The Impact of Green Credit on the Profitability of Commercial Banks in a Low-Carbon Context

This paper delves into the concept of green credit and its theoretical underpinnings, contending that it exerts a discernible influence on the profitability of commercial banks. Through empirical investigation employing an individual fixed effect model, it seeks to ascertain the precise impact of green credit on the profitability of such banks. Drawing on panel data encompassing 16 commercial banks in China spanning the period from 2011 to 2020, this study undertakes a thorough analysis to gauge the extent to which green credit affects bank profitability. The findings of this analysis not only contribute to a deeper understanding of the relationship between green credit and bank profitability but also inform potential strategies for enhancing the financial performance of commercial banks in the context of environmental responsibility. By synthesizing these insights with a comprehensive analysis of the prevailing circumstances, the paper concludes by offering recommendations aimed at bolstering the profitability of commercial banks, thereby aligning their operations more closely with sustainable principles and environmental objectives.

Effect of Basel III Liquidity Ratio LCR and NSFR on the Profitability of Commercial Banks in Bangladesh

Effect of Basel III Liquidity Ratio LCR and NSFR on the Profitability of Commercial Banks in Bangladesh

Pengaruh Maqashid Syariah Index, Islamicity Performance Index dan Debt Equity Ratio terhadap Profitabilitas dengan Intellectual Capital sebagai Variabel Moderating pada Bank Umum Syariah di Indonesia

This study aims to determine and test the effect of the Sharia Index Maqashid Index, Islamic Performance Index, and Debt Equity Ratio on the profitability of sharia commercial banks in Indonesia, using intellectual capital as a moderation variable. This study uses quantitative research methodology and takes secondary data from the annual financial statements of Indonesian Sharia Commercial Banks in 2018-2022. The sample of eight banks was selected through the use of purposive sampling. Data analysis techniques are called Moderated Regression Analysis (MRA). The results of this study are as follows: (1) Sharia Maqashid Index has no influence on profitability; (2) Islamic performance index has an influence on profitability; (3) Debt Equity Ratio has a negative influence on profitability; (4) Intellectual Capital can moderate the influence of the Sharia Maqashid Index on profitability; (5) Islamic performance index of profitability cannot be moderated by intellectual capital; and (6) Intellectual Capital can moderate the effect of debt equity ratio on profitability.

The Role of Sustainable Competitive Advantage on Sustainable Finance and Bank Profitability

This study examines the moderating effect of sustainable competitive advantage on the relationship between sustainable finance and bank profitability of Indonesian conventional commercial banks from 2019 to 2022. The study has found that sustainable finance has a positive impact on bank profitability (ROA and ROE). However, the impact of sustainable competitive advantage on bank profitability was only positive with ROA, suggesting that ROA is a more effective indicator of bank profitability for this study. Furthermore, the study indicates that the impact of sustainable finance on bank profitability (both ROA and ROE) is diminished by the delay in the implementation of sustainability reporting during the COVID-19 reporting period. The results of this study are likely to encourage banks to increase their sustainable finance and focus on improving the quality of sustainability reporting in order to gain a competitive advantage in the current banking industry landscape in Indonesia.