Profitability Determinants of the Macedonian Banking Sector in Changing Environment

Ćurak, Marijana; Poposki, Klime; Pepur, Sandra

doi:10.1016/j.sbspro.2012.05.045

Cited by 100 publications

(116 citation statements)

References 12 publications

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“…There are many previous studies that used return on assets (ROA) or return on equity (ROE) as measure of performance (Curak and al., 2012;Adusei, 2015). In this study, we used the net interest margin (NIM) since it reflects more performance especially for banks which are based on traditional activities like Tunisian banks.…”

Section: An Overview On the Evolution Of Liquidity Risk And Bank Perfmentioning

confidence: 99%

Liquidity Risk and Bank Performance: An Empirical Test for Tunisian Banks

Hakimi

Zaghdoudi

2017

BER

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An important part of banking literature was interested in the relationship between credit risk and bank performance. However, only few studies investigated the association between liquidity risk and bank performance. The aim of this paper is to study the effect of liquidity risk on the Tunisian bank performance. To this end, we used a sample of 10 Tunisian banks over the period 1990-2013. By applying panel data method, precisely random effect regression, results show that liquidity risk decreases significantly Tunisian bank performance. Also, findings indicate that international financial crisis and inflation act negatively and significantly on bank performance.

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Section: An Overview On the Evolution Of Liquidity Risk And Bank Perfmentioning

confidence: 99%

Liquidity Risk and Bank Performance: An Empirical Test for Tunisian Banks

Hakimi

Zaghdoudi

2017

BER

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“…Higher capitalization, which serves as a safety cushion, implies lower insolvency risk (bank is safer) and according to the risk-return hypothesis, a lower profitability is expected (negative relationship) (Curak et al, 2012). However, creditworthiness of better capitalized and safer banks encourage the confidence of depositors which lowers interests as funding costs and the need for external financing, thereby lowering interest expenses.…”

Section: Insolvency Riskmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

“…Bank specific factors could include bank size, capital adequacy or insolvency risk, credit risk, liquidity risk, operational efficiency or business model (Bashir, 2003;Athanasogloua et al, 2008;Curak, Poposki, & Pepur, 2012;Petria et al, 2015;Zarrouk et al, 2016). Industry factors could comprise market concentration, ownership structure or stock market capitalization (Bashir, 2003;Athanasogloua et al, 2008;Curak et al, 2012;Petria et al, 2015Athanasoglou et al, 2008Ćurak, et al, 2012;Petria et al, 2015). Macroeconomic factors that influence profitability include Gross Domestic Product (GDP) and its growth (GGDP) (Bashir, 2003;Curak et al, 2012;Aliyu & Yusof, 2016), inflation rate (Molyneux & Thornton, 1992;Bashir, 2003;Athanasogloua et al, 2008;Zarrouk et al, 2016;Aliyu & Yusof, 2016), or the exchange rate (Aliyu & Yusof, 2016) or money supply (Molyneux & Thornton, 1992).…”

Section: Introductionmentioning

confidence: 99%

“…The most analytical method they use is the analysis of panel data, such as simple panel regression and the Generalized Methods of Moment (GMM) (Molyneux & Thornton, 1992;Bashir, 2003;Zarrouk et al, 2016). Some research use a simple OLS method (Ramlan & Adnan, 2016) and dynamic models such as Error Correction model (ECM) (Curak et al, 2012).…”

Section: Introductionmentioning

confidence: 99%

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Examining the impact of bank’s risks to Islamic banks’ profitability

Suseno

Bamahriz

2017

Econ. J. Emerg. Mark.

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This paper analyzes the impact of banks' risk to the profitability of Islamic banks and to identify what risks play the non-trivial role. To this objective, 75 Islamic banks in 24 countries in 2015 have been studied. A series of bank risks, industry-specific and macroeconomic indicators are combined to explain the profitability of Islamic banking as measured by Return on Average Assets (ROAA), Return on Average Equity (ROAE), and Value Added (VA). The bank risks comprise credit risk, insolvency risk, liquidity risk, and operational risk. Having used robust linear regressions, the results indicate that all four types of risk influence bank's profitability. Operational risk is the risk that plays the most important role in influencing banks' profitability, whether measured by ROAA, ROAE or profit before taxes over the total asset (PBTTA). On the other hand, credit risk, liquidity, and insolvency do not conclusively increase or decrease Islamic bank profitability. Macroeconomic conditions, measured by inflation, actually has a positive impact on the profitability of Islamic banks. This indicates that operational risks and macroeconomic stability should be given primary attention in increasing bank's profitability. AbstrakMakalah ini mengidentifikasi dan menganalisis dampak risiko bank terhadap profitabilitas bank syariah. Untuk itu penelitian ini meneliti 75 bank syariah di 24 negara pada tahun 2015. Serangkaian risiko bank, indikator industri dan makroekonomi dianalisis untuk menjelaskan profitabilitas perbankan syariah yang diukur dengan Return on Average Assets (ROAA), Return on Average Equity (ROAE), dan Value Added (VA). Risiko bank terdiri dari risiko kredit, risiko insolvensi, risiko likuiditas, dan risiko operasional. Dengan menggunakan regresi linier, hasil penelitian menunjukkan bahwa keempat jenis risiko tersebut mempengaruhi profitabilitas bank. Risiko operasional adalah risiko yang berperan paling penting dalam mempengaruhi profitabilitas bank, baik yang diukur dengan ROAA, ROAE atau laba sebelum pajak atas total aset (PBTTA). Di sisi lain, risiko kredit, likuiditas dan insolvensi tidak secara meyakinkan meningkatkan atau menurunkan profitabilitas bank syariah. Kondisi makro ekonomi, yang diukur dengan inflasi, sebenarnya berdampak positif terhadap profitabilitas bank syariah. Hal ini mengindikasikan bahwa risiko operasional dan stabilitas makroekonomi harus mendapat perhatian utama dalam meningkatkan profitabilitas bank.

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The determinants of profitability of Indian commercial banks: A panel data approach

et al. 2018

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The current study examines the determinants of profitability of Indian commercial banks. The analysis is conducted over a period of 10 years in which the Indian banking sector has gone under different changes such as demonetization and issues related to banking sector sustainability and banking sector frauds. The analysis is based on balanced panel data over a period ranging from 2008 to 2017 for 69 commercial Indian banks. Profitability of Indian banks is measured by two proxies, namely, return on assets (ROA) and return on equity (ROE), whereas bank size, assets quality, capital adequacy, liquidity, operating efficiency, deposits, leverage, assets management, and the number of branches are used as bank‐specific factors. Further, a set of macroeconomic determinants such as gross domestic product, inflation rate, interest rate, exchange rate, financial crisis, and demonetization are used as independent variables. Stationary test along with pooled, fixed, random effect models and panel correction standard error are used in this study. The results revealed that bank size, the number of branches, assets management ratio, operational efficiency, and leverage ratio are the most important bank‐specific determinants that affect the profitability of Indian commercial banks as measured by ROA. Furthermore, among the bank‐specific determinants, the results revealed that bank size, assets management ratio, assets quality ratio, and liquidity ratio are found to have a significant positive impact on ROE. With regard to the macroeconomic determinants, the results revealed that the inflation rate, exchange rate, the interest rate, and demonization are found to have a significant impact on ROA. However, in the case of ROE, the results show that all macroeconomic determinants except demonization have a significant impact on the bank's profitability as measured by ROE.

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Profitability Determinants of the Macedonian Banking Sector in Changing Environment

Cited by 100 publications

References 12 publications

Liquidity Risk and Bank Performance: An Empirical Test for Tunisian Banks

Liquidity Risk and Bank Performance: An Empirical Test for Tunisian Banks

Examining the impact of bank’s risks to Islamic banks’ profitability

The determinants of profitability of Indian commercial banks: A panel data approach

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