Growth and Earnings Persistence in Banking Firms: A Dynamic Panel Investigation

This paper investigates (i) whether growth and profitability persist in banking firms, (ii) whether the level and volatility of growth and profitability are bank-size dependent, and (iii) the relationship between growth and profitability of a bank. Using a dynamic panel model estimated by GMM for a mixed sample of more than 1500 banks from 65 countries, we find no evidence of persistence in bank growth. However, our findings suggest significant persistence in bank profitability. Moreover, our results show that the growth and profitability dynamics of banks based in OECD countries differ from those of banks in non-OECD countries.bank size, bank earnings, earnings volatility, bank risk, Gibrat’s law

Bank-Specific, Industry-Specific and Macroeconomic Determinants of Bank Profitability

The aim of this study is to examine the effect of bank-specific, industry-specific and macroeconomic determinants of bank profitability, using an empirical framework that incorporates the traditional Structure-Conduct-Performance (SCP) hypothesis. To account for profit persistence, we apply a GMM technique to a panel of Greek banks that covers the period 1985-2001. The estimation results show that profitability persists to a moderate extent, indicating that departures from perfectly competitive market structures may not be that large. All bank-specific determinants, with the exception of size, affect bank profitability significantly in the anticipated way. However, no evidence is found in support of the SCP hypothesis. Finally, the business cycle has a positive, albeit asymmetric effect on bank profitability, being significant only in the upper phase of the cycle.Bank profitability; business cycles and profitability; dynamic panel data model

COMPARATIVE ANALYSIS ON DETERMINANTS OF PROFITABILITY OF DOMESTIC AND FOREIGN BANKS IN INDONESIA (EMPIRICAL STUDIES ON COMMERCIAL BANKS USING MONTHLY REPORT OF BANKS FINANCIAL STATEMENTS PERIOD OF 2014.1-2015.12)

Profitability has an important role for bank sustainability, profitability is one of the most important pillars for bank in running their activities. Bank in generating profit, there are some things that must be considered, for instance is determinant factors that will affect the growth of profitability. By knowing the determinant factors of profitability, banks will be more prudent in doing strategies for generating greater profit and to face the unpredictable circumstances. The purposes of this research are to analyse the influence of Total Assets, Equity, Loan Loss Provisions, Off-Balance Sheet Activities, Overhead Costs, and Lagged Profitability to Profitability (ROA and NIM) of Domestic and Foreign Banks that operating in Indonesia period of 2014 – 2015, and also this research will present the comparative analysis of both bank groups (domestic and foreign). The population of this study were 66 Domestic Banks and 39 Foreign Banks (commercial banks) operating in Indonesia. This research also used monthly report of banks financial statements over the period of 2014(1)-2015(12). In the fact, data of monthly reports will provide more complete and accurate information to give a better result. This study used the cross-section method in taking the population. The results of this research had found various results, proving that the determinant factors used in this research had an influence on Foreign and Domestic Banks profitability. But there were some results that were not in accordance with the hypotheses that had been made. From this research also obtained, that there was a difference between influence of determinants factors to Domestic Banks profitability with influence of determinant factors to Foreign Banks profitability

Bank Profitability and Taxation

This paper investigates how bank profitability is affected by the corporate income tax (CIT). For this purpose it uses aggregate data of the banking sector of the main industrialized countries, for the period 1980-2003. The main novelties with respect to the existing literature are two. First, it explicitly considers that the CIT is not specific to the banking sector so that changes in CIT rate can affect both banks and borrowing firms. With the help of a simple theoretical model we derive a set of predictions about the impact of the CIT on banks’ income statement. Second, we consider all main components of banks’ profit and loss accounts: net interest income, interest expenses, non-interest income, operating costs, and provisions. In this way, we are able to disentangle the extent to which a bank is able to shift its tax-burden forward to its lenders, depositors, and purchasers of fee-generating servicesTax-Shifting, Corporate Income Tax, Bank Profitability

Bank profitability and taxation

This paper investigates how bank profitability is affected by corporate income tax (CIT) using aggregate data on the banking sector of the main industrialized countries for the period 1981-2003. Two main novelties emerge with respect to the existing literature. First, the paper explicitly considers that CIT is not specific to the banking sector, so that changes in the CIT rate can affect both banks and borrowing firmsÂ’ behaviour. Thus, with the help of a simple theoretical model we derive a set of predictions about the impact of CIT on banksÂ’ income statement. Second, by considering all the main components of banksÂ’ profit and loss accounts, we are able to test such predictions and to disentangle the extent to which a bank is able to shift its tax-burden onto its borrowers, depositors, and purchasers of fee-generating services. It turns out that CIT has a substantial impact on the composition of banking sector revenues but cannot explain large differences in the level of profitability across countries.tax-shifting, corporate income tax, bank profitability

Bank Relationship and Firm Profitability

This paper examines how bank relationships affect firm performance. An empirical implication of recent theoretical models is that firms maintaining multiple bank relationships are less profitable than their single-bank peers. We investigate this empirical implication using a data set containing virtually all Norwegian publicly listed firms for the period 1979-1995. We find that profitability is substantially higher if firms maintain only a single bank relationship. We also find that firms replacing a single bank relationship are on average smaller and younger than firms not replacing a single bank relationship.bank relationships;firm profitability

PURSUING EFFICIENCY WHILE MAINTAINING OUTREACH: BANK PRIVATIZATION IN TANZANIA

Profitability improvements after the privatization of a large state-owned bank might come at the expense of reduced access to financial services for some groups, especially the rural poor. The privatization of Tanzania's National Bank of Commerce provides a unique episode for studying this issue. The bank was split into the "new" National Bank of Commerce, a commercial bank that assumed most of the original bank's assets and liabilities, and the National Microfinance Bank, which assumed most of the branch network and the mandate to foster access to financial services. The new National Bank of Commerce's profitability and portfolio quality improved although credit growth was slow, in line with privatization experiences in other developing countries. Finding a buyer for the National Microfinance Bank proved very difficult, although after years under contract management by private banking consultants, Rabobank of the Netherlands emerged as a purchaser. Profitability has since improved and lending has slowly grown, while the share of non-performing loans remains low.access to banking; access to banking services; access to financial services; access to services; Accounting; Agricultural Bank; asset allocation; asset portfolio; ATMs

Funds transfer pricing in banking

Every bank needs to better understand the sources of its profitability. Whatever the size of the bank, funds transfer pricing (FTP) can be used to help managing the bank's profitability by analyzing earnings for the whole institution or for different profit centers. In today’s banking environment, it is essential to look at the earnings both as a whole and broken down into various components. Funds Transfer Pricing is an analysis tool that can be used to help a bank measure its profitability in a variety of different ways. It allows management to compare the profitability of different product lines within the company, and it can be drilled down even further to allow comparison between individual employees. It is also very useful for comparison between branches. This study will reveal the role of Fund Transfer Pricing (FTP) in banks.funds transfer pricing, profit, bank, business units