Determinants of Profitability in Banking Sector: An Evidence from Pakistan

Raza, Hasan; Saeed, Atiya; Hena, Samreen

doi:10.19044/esj.2019.v15n7p35

Cited by 9 publications

(10 citation statements)

References 7 publications

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“…It will impact the company's ability to generate profits in the next period to decrease and make its profitability as measured by a smaller ratio than in the previous period because the volume of credit extended is smaller than the previous period. This result contradicts Mahardian (2008) and Widianata (2012), Raza et al (2019), Duraj &Moci (2015), andAl Zaidanin (2020); this shows that the NOM ratio has a significant positive effect (ROA) on finances. Performance due to differences in data and the state of the financial ratios of the object under study.…”

Section: Discussionmentioning

confidence: 72%

“…The standard NOM ratio set by Bank Indonesia is 6% or higher. Based on the empirical results of Mahardian (2008) and Widianata (2012), Raza et al (2019), Duraj & Moci (2015), and Al Zaidanin (2020), this shows that the NOM ratio has a significant positive effect (ROA) on financial performance. The following assumptions: H4: Net Operating Margin (NOM) positively impacts Islamic Commercial Banks' performance (ROA).…”

Section: The Effect Of Nom On the Performance (Roa) Of Islamic Commercial Banksmentioning

confidence: 96%

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Determining the Performance of Sharia Commercial Banks With Moderation of Non Performing Financing Ratio in Indonesia

Hidayat¹,

Wardini²,

Wati³

2021

riset

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The research objectives to be achieved are: (1) To analyze and reveal empirically whether the Capital Adequacy Ratio (CAR), OE, Financing to Deposit Ratio (FDR), Net Operating Margin (NOM) affects the performance of Islamic Commercial Banks as measured by the ratio ROA). (2) To determine and analyze whether the non-performing loan ratio (NPF) moderates the effect of Capital Adequacy Ratio (CAR), OE, Financing to Deposit Ratio (FDR), and Net Operating Margin (NOM) on the performance of Islamic Commercial Banks (Return On Assets). This type of research is a quantitative research. The population used in this study is a Islamic commercial banks registered with the Financial Services Authority consisting of 14 BUS from 2015-2019. The data used is secondary data and uses saturated sampling method. Researchers used this sampling technique because the total population of 14 Islamic commercial banks companies in Indonesia are registered with the Financial Services Authority (OJK). Analysis of research data using Moderating Regression Analysis. Simultaneously CAR, OE, FDR and NOM have a positive effect on BUS performance for the 2015-2019 period as measured by ROA, but the partial results are only CAR that has a positive effect on ROA while OE, FDR and NOM have a negative effect on ROA, this happens because The capital adequacy held in the current period in lending is currently decreasing when compared to the previous period so that it has an impact on decreasing income and profit for the next period. Simultaneously, NPF moderates CAR, OE, FDR and NOM have a positive effect on BUS performance for the 2015-2019 period as measured by ROA, while the partial results are only NPF which has an impact on reducing the effect of CAR on ROA, while other variables when NPF moderate the relationship with ROA moves towards improvement. This is because the capital adequacy ratio is currently used in handling the current bad credit ratio as a result of loans extended in the previous period so that the current capital that should be used to generate profits in the next period through an increase in the volume of credit at this time from the previous period is reduced so that an impact on the decline in Islamic commercial banks profitability in the next period. As for what makes the difference in this study is the moderation of NPF on the effect of CAR, BOPO, FDR and NOM on ROA.

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Section: Discussionmentioning

confidence: 72%

Section: The Effect Of Nom On the Performance (Roa) Of Islamic Commercial Banksmentioning

confidence: 96%

Determining the Performance of Sharia Commercial Banks With Moderation of Non Performing Financing Ratio in Indonesia

Hidayat¹,

Wardini²,

Wati³

2021

riset

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“…The study result aligns with the results of Mwangi et al (2018) and Al-Homaidi et al (2018), who found a positive relationship between total assets and financial performance. On the contrary, Raza et al (2019) found a negative relationship between total assets and financial performance.…”

Section: The Relationship Between Bank Size and Financial Performancementioning

confidence: 83%

“…Similarly, Raza et al (2019) examined the relationship between bank specific attributes (asset size, customers' deposit, loan to customers, capital adequacy) and the profitability of banks. The results from the analysis of data indicate that asset size had an inverse relationship with profitability, while customers' deposit does not have any significant influence on profitability of banks in Pakistan.…”

Section: Bank Size and Financial Performancementioning

confidence: 99%

The nexus between bank size and financial performance: Does internal control adequacy matter?

Akinola¹

2022

J. Account. Taxation

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The economic development of any nation is largely dependent on the stability of the nation's banking industry, because the industry promotes the savings culture of the public, aids capital funding, implements the monetary policy of a country and promotes the facilitation of international trade. Therefore this study examined the effect of bank size on the financial performance of listed Deposit Money Banks in Nigeria (DMBN). Also, the study examined the moderating effect of internal control adequacy on the relationship between bank size and financial performance. The study adopted an expost facto research design because secondary data were extracted from published annual reports of 10 DMB in Nigeria, for a period of 12 years from 2006 to 2017. The data were analyzed using descriptive and inferential statistics (multiple regression analysis). Results from the analysis showed that the proxies of bank size (total assets, number of employees and customers' deposit) had a cumulative effect on return on asset for financial performance. Also, internal control adequacy as a moderating variable enhanced the effect of bank size on financial performance. Hence, the study concluded that, total asset, number of employees ad customer's deposit as proxies for bank size had a combined effect on financial performance.

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“…The findings of the study using the data of 135 countries from 1995 to 2014 by Aizenman, Cheung & Ito, April (2017) [23] showed that the real interest rate affects private saving negatively whenever output volatility, old-age dependency, or financial development is over a specific limit and these effects are critical for the economy dependent upon a country's particular economic conditions. Raza, Hena & Saeed, (2017) [24] found the positive relationship between interest rate and bank deposit while negative relationship between savings and interest rate of scheduled banks listed in the State Bank of Pakistan during the period of 2002 to 2016. The study by Aslam, (2018) [25] revealed that the interest rate had influence on the savings for both long -run and short -run in Sri Lanka for the period of 1977 to 2017 and recommended to consider interest rate friendly policy for enhancing the savings in Sri Lanka by the policy makers.…”

Section: Interest Rate and Inflation On Savingsmentioning

confidence: 99%

The Implications of Interest Rates on Private Saving with Reference to Myanmar

Tun*¹,

Alrajawy²,

Bhaumik³

2020

IJRTE

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The private saving is one of the fundamentals for economic development and growth of the country. Thus, the main purpose of this paper is to analyze the effect of interest rates on private saving in Myanmar over the period from fiscal year 2013-14 Q1 to 2018 Q2. This study investigates the private saving of Myanmar’s banking sector which includes twenty seven private commercial banks, four State-owned banks and thirteen foreign bank branches. The quarterly data are obtained from secondary data sources collected from quarterly Financial Statistics Bulletin and annual reports of Central Bank of Myanmar, Statistical Year Books and Selected Monthly Economic Indicators published by CSO, Myanmar, as well as websites from commercial banks to investigate the effect of domestic interest rates on private saving. Inferential analysis including multiple regression analysis and correlation analysis as well as descriptive analysis are applied to examine the effect of domestic interest rates on private saving with the use of Statistical Package for Social Sciences (SPSS) software (version 25). The findings of the study reveal that all independent variables except from Treasury bill rate have significant impact on the savings while inflation and fixed deposit rate have adversely impact on savings. Among all independent variables, saving deposit rate is the most influent variable on attracting private saving. Therefore, the study concludes that policies for ensuring to adopt flexible interest rates structures and for maintaining reasonable inflation rate depending upon the macroeconomic conditions of the economy would be critical to mobilize private saving in Myanmar.

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Determinants of Profitability in Banking Sector: An Evidence from Pakistan

Cited by 9 publications

References 7 publications

Determining the Performance of Sharia Commercial Banks With Moderation of Non Performing Financing Ratio in Indonesia

Determining the Performance of Sharia Commercial Banks With Moderation of Non Performing Financing Ratio in Indonesia

The nexus between bank size and financial performance: Does internal control adequacy matter?

The Implications of Interest Rates on Private Saving with Reference to Myanmar

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