Does geographical proximity matter in determining the profitability of banks?

Ramlall, Indranarain

doi:10.1016/j.jpolmod.2022.07.003

Cited by 7 publications

(6 citation statements)

References 36 publications

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“…The growth of the NPL by 1% leads to a smaller ROA and ROE for 0.03% and 0.18%, which means that hypothesis H1 can be accepted. Our findings match the results of previous published studies [17,20,23,29,33,34,37,38]. Furthermore, if the CIR increases by 1%, the bank profitability indicators ROA and ROE will reduce by 0.01% and 0.14%, so H2 can be accepted.…”

Section: Discussionsupporting

confidence: 91%

“…Petria et al [19] claim that the economic growth expressed by GDP growth increases bank activity, which has a positive impact on a bank's profitability. The same finding about the positive effect of the GDP on the profitability of banks is shared by many authors [17,20,23,29,33,34,37,38] who, among other determinants, examined the impact of this macroeconomic determinant on the profitability of banks. Guillén et al [39] have shown that changes in the GDP have positively influenced the banks' profitability measured by the ROE in Latin America.…”

Section: Literature Reviewmentioning

confidence: 54%

“…The debt-to-GDP ratio has an indirect impact on the banks' profitability. Sovereign debt has a significant impact on the banking crisis [38,41]. Furthermore, the debt-to-GDP ratio has a positive impact on the levels of the NPL as shown by Louzis et al [42].…”

Section: Literature Reviewmentioning

confidence: 95%

“…When it comes to the macroeconomic determinants, our study considers two more, uncommonly used variables (UNM and DEBT), which enhances the current knowledge. When it comes to the GDP, findings from previous studies [17,19,20,30,34,38] have shown that there is a positive impact on bank profitability. According to that, our expectation regarding this variable is set in H6:…”

Section: Hypothesis 5 (H5)mentioning

confidence: 99%

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Modelling Profitability Determinants in the Banking Sector: The Case of the Eurozone

Mirović,

Kalaš,

Milenković

et al. 2024

Mathematics

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The aim of this study is to analyze which factors affect the profitability of banks in the eurozone and to make recommendations for supporting them to achieve higher levels of profitability in particular eurozone countries. The banks operating in the eurozone are specific that they are under one monetary policy. The main purpose of the banks’ profitability analysis is to identify main bank-specific and macroeconomic determinants and help bank management to more fully comprehend their importance of bank-specific determinants and macroeconomic determinants’ influence when measuring and evaluating bank profitability. For the purpose of this research, we analyze the impact of bank-specific determinants (NPL, CIR, NIM, NIF and NIT) and macroeconomic determinants (GDP, INF, UNM and DEBT) on bank profitability in the eurozone for the period of 2015–2020 using a random effects model, fixed effects model, and the general method of moments (GMM). This empirical research analyzed quarterly data series from Eurostat for eighteen countries in the eurozone. We came to the results that on the eurozone-level NPL, the cost-to-income ratio has a negative impact on the banks’ profitability, while the net interest income to the operating income, the net income for trading assets to the operating income and the net fee and commission income to the operating income have a positive impact on the banks’ profitability. Considering the macroeconomic variables, we found a positive impact only in the case of GDP, while the inflation rate, unemployment rate and gross government debt have shown a negative impact on the banks’ profitability. The main contribution of this study implies different panel techniques with two uncommonly used macroeconomic variables such as the unemployment rate and debt ratio. The results on the country level differ from country to country and these findings can give a lead to policy makers on the national level on how to enhance the banks’ profitability levels.

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Section: Discussionsupporting

confidence: 91%

Section: Literature Reviewmentioning

confidence: 54%

Section: Literature Reviewmentioning

confidence: 95%

Section: Hypothesis 5 (H5)mentioning

confidence: 99%

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Modelling Profitability Determinants in the Banking Sector: The Case of the Eurozone

Mirović,

Kalaš,

Milenković

et al. 2024

Mathematics

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“…The reliability of business management and its performance can provide a sustainable working approach to get the best business practices [ 26 ]. Furthermore, Ramlall [ 27 ] reported that profitability of banks is improved with their CSR practices that are possible with leadership management. Klein and Weill [ 28 ] also pointed out that the ethical working of management achieves the goals of CSR.…”

Section: Review Of Literaturementioning

confidence: 99%

The CSR perspective: Interplay of technological innovation, ethical leadership and government regulations for sustainable financial performance

Zhu,

Salman,

Kiran

et al. 2024

PLoS ONE

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The financial performance of Chinese public and private sector banks is changing over time. There is no stability in the financial performance of Chinese banks which hurts businesses and the market. The purpose of current research was to determine the influence of corporate social responsibility (CSR) on driving the sustainable financial performance of Chinese banks. From methodological perspective, data was collected from 329 banking sector employees from China to partial least square–structural equation model (PLS-SEM) is employed for data analysis. The research used SPSS 24 and Smart PLS 4 as statistical analysis tools. This research confirmed that achieving sustainability in financial performance for Chinese banks can be achieved with CSR influenced by technological innovation, ethical leadership, and government regulations. This research has statistically confirmed that transformational leadership leading to CSR with technological innovation, ethical leadership, and government regulations can make significant improvements in financial performance. The framework developed by current research is a novel contribution to the literature. The findings of this research improve the literature on the banking sector and advanced performance. Furthermore, this research has highlighted significant ways that can help the banking sector employees to improve their financial performance with sustainability.

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Spatial dependence in the non-performing loans of small Italian cooperative banks

2023

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LM test description Statistic P-value Anselin (1988) Conditional test for spatial error autocorrelation (H 0 : spatial error autoregressive coefficient equal to zero) 9.66 0.000 Conditional test for spatial lag autocorrelation (H 0 : spatial lag autoregressive coefficient equal to zero) 20.86 0.000 Baltagi et al. (2003) Joint test (H 0 : absence of random effects and spatial autocorrelation) 2843.9 0.000 Marginal test of random effects (H 0 : absence of random effects) 50.32 0.000 Marginal test of spatial autocorrelation (H 0 : absence of spatial autocorrelation) 17.66 0.000 Conditional test of spatial autocorrelation (H 0 : absence of spatial autocorrelation, assuming random effects are non null) 15.42 0.000 Conditional test of random effects (H 0 : absence of random effects, assuming spatial autocorrelation may or may not be equal to 0) 48.82 0.000 Baltagi et al. (2007) Joint test (H 0 : absence of serial or spatial error correlation or random effects) 2976.2 0.000 One-dimensional conditional test (H 0 : absence of spatial error correlation, assuming the existence of both serial correlation and random effects) 22.48 0.000 One-dimensional conditional test (H 0 : absence of serial correlation, assuming the existence of both spatial error correlation and random effects) 436.77 0.000 One-dimensional conditional test (H 0 : absence of random effects, assuming the existence of both serial and spatial error correlation) 117.59 0.000

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Does geographical proximity matter in determining the profitability of banks?

Cited by 7 publications

References 36 publications

Modelling Profitability Determinants in the Banking Sector: The Case of the Eurozone

Modelling Profitability Determinants in the Banking Sector: The Case of the Eurozone

The CSR perspective: Interplay of technological innovation, ethical leadership and government regulations for sustainable financial performance

Spatial dependence in the non-performing loans of small Italian cooperative banks

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