Effects of Economic Openness and Inflation on Commercial Banks’ Profitability: Panel Data Evidence from Nigeria, Post-Banking Sector Consolidation (2005-2012).

The paper employs panel data estimation techniques to investigate the effects of economic openness (trade and financial openness) and inflation on commercial banks’ profitability in Nigeria. Using panel data for the period 2005 to 2012 on a sample of 14 commercial banks in the country, the empirical analysis based on the random effect model selected on the basis of Hausman test result indicates that the impact of financial openness on commercial banks’ profitability was positive and significant while the impact of trade openness was also positive, but statistically insignificant. Inflation and bank size were also observed to have had insignificant impact on banks’ profitability in the study period. Further evidence from the analysis is that financial openness and inflation adversely affected commercial banks’ profitability in the heat of the global financial crisis (2007-2010), marked by the downward trends in return on asset of most of the banks within the period. These findings suggest inter alia that economic openness could enhance the profitability of commercial banks if the banks could take advantage of the opportunities it offers. The paper therefore recommends greater integration of the country’s economy with the global market, active participation of Nigerian banks in trade finance and merchant banking, establishment of foreign branches of the commercial banks in other countries particularly in countries with fast growing economies, quality asset management, some restriction in cross-border capital flows and lowering the rate of inflation particular in periods of global financial crisis, etc. to enhance the profitability of the commercial banks. Keywords: Financial Openness, Trade Openness, Inflation, Commercial Banks’ Profitability, Panel Data Estimation, Nigeria

Determinants of Islamic and conventional banks profitability in Malaysia

This study investigates the determinants of Islamic and conventional banks profitability of 30Malaysian commercial banks over the period from 2007 to 2012. Using the Ordinary Least Square (OLS), the result shows that capital significantly influences the return on assets (ROA) of Islamic and conventional banks in Malaysia. This implies that strong capital base is important in determining the profitability of commercial banks in Malaysia. For macroeconomic variables, inflation determines the profitability of Malaysian conventional banks only but not Islamic banks. As for the interest rate, which is measured by base lending rate (BLR), the findings demonstrate that BLR positively and significantly influences the ROA of the full sample. This study also controls for the effect of 2008 global financial crisis on the profitability of Malaysian commercial banks by introducing CRISIS dummy in the model. The result indicates that Malaysian bank profitability is not affected by the 2008 global financial crisi

The impact of liquidity risk determinants on profitability: An empirical study on islamic banks in the Kingdom of Bahrain

The sustainability of the banking system depends on the profitability and capital adequacy. Practically, profitability and liquidity are effective indicators of the corporate health and performance of not only the Islamic commercial banks but all profit-oriented ventures. Therefore, liquidity risk is considered as one of the serious concerns and challenges for modern era banks. As the global financial crisis spread, Islamic banks in Kingdom of Bahrain began to be affected; all of a sudden, some of the biggest Islamic banks, such as the Bahrain Islamic Bank, the Gulf Finance House and the Ithmar Bank, ended up with net losses. The aim of this study is to investigate the impact of the significant determinants of liquidity risk on the profitability of Islamic commercial banks in Bahrain during the 2007-2013 periods as well as to assess the impact of the global financial crisis on the profitability of these banks during the recovery period. Multiple regressions analysis was applied. By using Ordinary Least Squares (OLS) the results revealed that all the independent variables are significant with both models ROA and ROE except financial leverage and deposits have a statistically insignificant impact on ROA- Capital adequacy, financial leverage, deposits and GDP have a positive and significant impact; whereas bank size and the global financial crisis have a negative impact and are statistically significant. From these results, it is recommended that these banks control and manage properly these variables in order to create a high level of liquidity in the banks which would achieve a good profitability, leading to the sustainability of the financial banking syste

Comparative Analysis of Financial Performance of Commercial Banks in Tanzania

This paper analysed the financial performance of commercial banking sector in Tanzania for the period of 7 years from 2006 to 2012. Financial ratios were employed to measure the profitability and liquidity of banks; in addition Analysis of Variance (ANOVA) was used to test the significance differences of profitability means among peer banks groups. The study found that overall bank financial performance increased considerably in the first two years of the analysis. A significant change in trend is noticed at the onset of the global financial crisis from 2008 to 2009. However, Tanzania banking sector remained stable; banks are adequately capitalized and profitable and remained in a sound position. The study found that, there is no a significant means difference of profitability  among of peer banks groups in term of ROA, however, a significance differences among banks group is existed in term of ROE and NIM. Key words: financial performance, financial ratios, commercial banks, Tanzani

The Impact of Credit Risk Management on Profitability of Nordic Commercial Banks

This thesis investigates credit risk management in Nordic commercial banks and its effect on profitability. Two determinants of credit risk are chosen according to relevant literature, namely loan loss provision ratio and capital adequacy ratio. Thirteen banks in total are then investigated across the 16 year time frame from 2000-2015. The results seek to address two essential questions. Firstly, it seeks to capture the relation between credit risk management and profitability of Nordic commercial banks in the full data sample. Loan loss provision ratio is found to have negative effect on the performance of banks, while capital adequacy ratio presents mixed results. Second part of the thesis focuses on the financial crisis component, most notably its impact on the change in credit risk management. It is shown that macroeconomic environment plays a bigger role in the decrease in profitability after the financial crisis than credit risk management does

The Determinants of Commercial Bank Profitability in Zimbabwe: A Dynamic Panel Data Model

This study examined profitability of 15 commercial banks in Zimbabwe that survived the economic crisis experienced in Zimbabwe from 2003 to 2008. The first objective of the study was to determine whether the profitability of these banks significantly changed over the post crisis period. Using annual financial accounts data, from 2011 to 2014, the results from the one-way repeated measures ANOVA show that the mean profit ratios significantly changed over the four year period. The second objective was to determine factors influencing bank profitability under a multicurrency regime and the results from a dynamic panel data model show that diversification, funding cost and market share significantly affected profitability of commercial banks in Zimbabwe during the period under study. Keywords: bank profitability, dynamic panel data, diversification, funding cost, market share

Macroeconomic and Bank-Specific Determinants of Malaysian Bank Profitability: Evidence During the Period of 2008 Global Financial Crisis

This dissertation analyzes the determinants of commercial bank profitability in Malaysia for the period 2006-2012. This dissertation also examines whether 2008 global financial crisis affects bank profitability in Malaysia. Since the sample comprises foreign and local banks, this dissertation also tests whether there is significant difference between foreign and local banks in the aspect of profitability, as generally, foreign banks have larger capital than that of local banks. From the fixed effect estimation analysis, the findings suggest that Malaysian banks with a larger capital and higher credit quality exhibit high profitability level. The findings also demonstrate that bank size has a negative relationship with bank profitability, implying that bigger banks have lower profits than that of small banks. The results also do not support that foreign banks are more profitable than that of local banks in the period studied. In the aspect of macroeconomics determinants, the results suggest that GDP is not the main determinant of Malaysian bank profitability , while on the contrary, inflation rate significantly impact bank profitability in Malaysia. Interestingly, this dissertation does not find conclusive evidence to support that the 2008 global financial crisis affects bank profitability in Malaysia

Sensitivity of bank profitability before and after financial crisis / Siti Farhana Shahira Anuar

The profitability of the bank is very important in order for them to rolling up their business. However, the profitability of the banks can be determine by the several factors which is internal and external factors. Internal factors can be come from a bank itself while for the external factors is from the macroeconomic indicators. A good financial system is important for the economic growth (Rachdi, 2013). The aim of this study is to investigate the sensitivity of the bank profitability before (2003 — 2009) and after (2010 — 2016) the financial crisis. The worst financial crisis happened in 2008 (Askari, Shirazi, & Aghababaei Samani, 2018). There are some of the financial institutions suffer from the losses during this financial crisis which need an intervention of the national government to save out the banks (Lai et al., 2014). The measures of profitability that have been used in this study is Return on Asset (ROA). This study will conduct by using a panel data and the sampling for this study is 6 commercial banks in Malaysia which is Maybank, Public Bank, AmBank, RHB Bank, CIMB Bank and Bank Islam

Falling under the control of a different type of owner : risk-taking implications for Banks

European banks have experienced significant changes in the type of entity that owns them (another bank, an individual or a family, a non-financial company, an institutional investor, a government, a foreign entity, a domestic entity…). In this paper, we look at the influence of ownership type changes on performance. Working with a panel of commercial banks from 17 European countries, we find that although banks that experience a change in ownership type do not exhibit lower or higher risk or profitability than other banks, their risk and profitability is significantly affected after the change takes place. The type of the acquirer plays a significant role in explaining the observed changes. When the acquirer is a non-financial company, the state or an institutional investor, the level of risk increases after the change while the level of profitability remains unchanged. Conversely, when the acquirer is a bank, we find that the level of risk-adjusted profitability decreases. Banks acquired by a different type of owner during the global financial crisis do not perform better or worse than they did before

A financial Ratio Analysis of Commercial Bank Performance in South Africa

This paper investigates the performance of South Africa’s commercial banking sector for the period 2005- 2009. Financial ratios are employed to measure the profitability, liquidity and credit quality performance of five large South African based commercial banks. The study found that overall bank performance increased considerably in the first two years of the analysis. A significant change in trend is noticed at the onset of the global financial crisis in 2007, reaching its peak during 2008-2009. This resulted in falling profitability, low liquidity and deteriorating credit quality in the South African Banking sector