Bank profitability and GDP growth in China: a note

Tan, Yong; Floros, Christos

doi:10.1080/14765284.2012.703541

Cited by 108 publications

(112 citation statements)

References 15 publications

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“…The financial development variable has mixed results, positive in model 5 and negative in model 6 but insignificant in both, however, only in model 7 is positive and significant which indicate that the demand for banking products and services increases in the economies that have well-developed banking sectors, so banks can increase their profitability with effective strategies. This result is in line with Tan and Floros (2012). However, it is in contrast with Coccorese and Girardone (2017) who find a negative and significant impact of financial development variable on bank profitability because operation in such highly competitive and crowded environment can cause a negative impact on the banks' margins and so the profit.…”

Section: Resultssupporting

confidence: 81%

The Banks Profitability and Economic Freedom Quality: Empirical Evidence from Arab Economies

Aziz¹,

Knutsen²

2019

JBFE

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This study empirically examines the impact of economic freedom quality and global financial crisis on the banking sector profitability in the Arab region. The analysis is performed by employing system GMM estimation in panel data comprising of 14 Arab countries over the period 1985-2016. The study constructed an economic freedom index based on the economic freedom indicators. The findings indicate that greater economic freedom has positively influenced the profitability of the Arab banking sector. The results also suggest that the more profitable banks are those that have lower operating expenses against asset and income, better capitalized, more diversified and concentrated at economies having growth in the GDP. Furthermore, the global financial crisis in 2008 negatively impacted the profits of Arab banks.

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Section: Resultssupporting

confidence: 81%

The Banks Profitability and Economic Freedom Quality: Empirical Evidence from Arab Economies

Aziz¹,

Knutsen²

2019

JBFE

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“…They find that liquidity risk is the endogenous determinant of bank performance and the causes of liquidity risk include components of liquid assets and dependence on external funding, supervisory and regulatory factors and macroeconomic factors. Tan and Floros (2012) infer that liquidity position improve bank's profitability in China. Fadzlan and Khazanah (2009) examine the determinants of profitability of China banking and suggest that liquidity has negative effects on profit.…”

Section: Literature Reviewmentioning

confidence: 97%

On the Nexus Between Risk Taking and Profitability: Evidences From Indonesia

Mongid¹,

Muazaroh²

2017

IJBS

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This paper test interrelationship between risk taking and profitability (ROAA) using two stage regression. We study 150 bank sample for 2008-2014 from Indonesia. Instrumented variable is total risk taking (RT) and the instruments are asset size, equity to total asset, loan asset ratio, loan loss reserve, efficiency, liquidity. For macroeconomic variables, we use economic growth, Central bank -rate (CBDR) and inflation rate (CPI). We find a positive relationship between risk taking (RT) and bank profitability (ROAA). Further, the relationship between risk taking (RT) and profitability (ROAA) is endogenous. The result confirms that bank's motivation to take more risk is to earn higher profit. In addition, capital ratio is negative to risk taking (RT) and profitability (ROAA). Interestingly, credit risk taking is negative due to the high correlation with a problem loan (LLRGL). The cost inefficiency is negative to bank’s profitability. Finally, for improving profitability, bank’s manager should manage the operation better such as reducing problem loan and improving cost efficiency as these actions are more effective than taking more risk taking (RT).Keywords: Risk Taking; Profitability; Two-Stage Regression; Macroeconomic; Indonesia.

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“…When the need for credit increases, the bank will benefit from credit interest. Different results were found by Tan and Floros (2012) who found that the GDP growth rate decreases the level of ROA. With the increasing demand for credit, banks are increasingly aggressive in offering lower interest rates, thereby creating competition between one bank with another bank.…”

Section: Gdp Growth Ratementioning

confidence: 67%

Determinants of Bank Performance in Indonesia

Usman

Lestari

2019

Minds

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This study aims to examine the determinants of commercial banks’ performances in Indonesia in the period 2008-2017 by their return on assets. Capital adequacy, asset quality, management efficiency and liquidity, and gross domestic product functioned as the predictors. The sample of this study was 25 conventional banks meeting the criteria of the purposive sampling method. The panel data with Eviews shows that asset quality has a negative effect and management efficiency has a positive impact on bank performance. Capital adequacy, liquidity, and gross domestic product growth rate do not affect the bank's performance. Managers need to tighten lending, carry out credit restructuring and manage the balance between assets and liabilities and, supervise credit.

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Bank profitability and GDP growth in China: a note

Cited by 108 publications

References 15 publications

The Banks Profitability and Economic Freedom Quality: Empirical Evidence from Arab Economies

The Banks Profitability and Economic Freedom Quality: Empirical Evidence from Arab Economies

On the Nexus Between Risk Taking and Profitability: Evidences From Indonesia

Determinants of Bank Performance in Indonesia

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