Sustainable Growth Rate and ROE Analysis: An Applied Study on Saudi Banks Using the PRAT Model

Altahtamouni, Farouq; Alfayhani, Ahoud; Qazaq, Amna; Alkhalifah, Arwa; Masfer, Hajar; Almutawa, Ryoof; Alyousef, Shikhah

doi:10.3390/economies10030070

Cited by 17 publications

(12 citation statements)

References 24 publications

(36 reference statements)

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“…However, the results contradict the findings by Thuranira (2014) who indicated that internal equity has no significant impact on profitability. The results also differ with Altahtamouni, et al (2022) who indicated that retained earnings have no significant impact on the profitability of Saudi banks. To test whether bank size moderating the nexus between internal equity capital on financial performance of lower tier commercial banks in Kenya, the results are as indicated in table 8.…”

Section: Hierarchical Multiple Linearcontrasting

confidence: 89%

Moderating effect of bank size on nexus between internal equity capital and financial performance of lower tier commercial banks in Kenya

Kinyua

Kiai

Muriu

2022

IJRBS

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The Kenyan banking sector is categorized into three tiers, tier I, II and III based on bank size. The profitability of tier II and III has been declining begging the question as to whether the size of the bank has any influence on the performance of the banks. This study determines the influence of internal equity capital on the financial performance of lower-tier commercial banks in Kenya. The study employed a descriptive and explanatory research design. The study population was 26 commercial banks in Tier II and III commercial banks in Kenya from 2016 to 2020. The average internal equity for lower-tier commercial banks in Kenya was .364 in 2016 and .400 in 2017. In 2018, the internal equity sharply rose to 8.299, which was followed by a small decline to 7.782 in 2019 signifying that in 2018 and 2019, lower-tier commercial banks in Kenya employed more internal equity financing to finance their operations. Through the hierarchical regression, it was established that internal equity has a positive and significant influence on the financial performance of lower-tier commercial banks in Kenya. Bank size does not moderate the effect of internal equity on the net profit margin of lower-tier commercial banks in Kenya (p = .202>0.05; R2 change of 0.07). The study recommends that lower-tier commercial banks need to encourage its shareholders to re-invest back their earnings rather than consuming them as dividends as internal equity is affordable and readily available when the bank is in urgent financial need.

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Section: Hierarchical Multiple Linearcontrasting

confidence: 89%

Moderating effect of bank size on nexus between internal equity capital and financial performance of lower tier commercial banks in Kenya

Kinyua

Kiai

Muriu

2022

IJRBS

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“…The ratio of banks like ROE, ROA, and NIMR represents whether the profitability condition or financial position is sufficiently sound in terms of ensuring the sustainability position of the banks. In an application, return on equity and retained earnings affect the sustainable growth rate of banks [30]. Therefore, the outcomes of our paper also must be helpful to ensure the sustainable financial condition of the banking system.…”

Section: Introductionmentioning

confidence: 95%

Impact of COVID-19 on Financial Performance and Profitability of Banking Sector in Special Reference to Private Commercial Banks: Empirical Evidence from Bangladesh

et al. 2022

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The current crisis caused by the COVID-19 pandemic has hit the global economy hard, causing significant damage to every aspect of the global banking system, and Bangladesh is no exception. For that reason, its performance and profitability have been affected. In this study, we investigate the impact of COVID-19 on the financial performance and profitability of the listed private commercial banks in Bangladesh. We initially compute each bank’s financial performance index (FPI) to determine the position according to their financial performance individually before and the current period of COVID-19 by the standardized CAMELS rating system. After assessing the position, the fixed-effect regression model is used to explore the impact of the bank’s specific variables and macroeconomic variables along with the banks’ variables on the banks’ profitability. The banks that performed better during the pre-pandemic period of COVID-19 also performed better during the pandemic period of COVID-19. The performance of AIBL, EBL, and BBL was almost autonomously higher during both periods. In the case of bank profitability, our paper discovered that during the pandemic period of COVID-19, high non-performing loan rates, holding more liquid assets, a high amount of hedging capital, and inappropriate bank size lessened the banks’ profitability. In contrast, a low leverage position and inflation rate enhanced the bank’s profitability during this period. The outcome of this study will help bank authorities detect the loopholes and take preventive measures that can improve their profitability during a crisis period like COVID-19. The investors and depositors who invest money in banks can precisely decide their portfolios.

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“…This is because corporate disclosure, if done in a conscious and truly effective manner, reduces the risk and uncertainty about performance and potential risks associated with the company. Finally, companies with a high level of ESG are expected to have higher growth potential because they have a long-term vision and take a more strategic approach to decision-making (Altahtamouni et al , 2022; Chatterji et al , 2016). While these results do not have a positive impact on corporate value in the short term, they can have a significant impact on the sustainability of shareholder value.…”

Section: Literature Reviewmentioning

confidence: 99%

Corporate reputation and culture: the link between knowledge management and sustainability

Arduini,

Manzo,

Beck

2023

JKM

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Purpose This study aims to analyze how sustainability, through an efficient knowledge management (KM) system, can serve as a driving force with respect to corporate culture and reputation. The research questions that guided this study are mainly the following: Are KM and sustainability related? Can culture strengthen the link between KM and sustainability? Can the link between KM and sustainability be affected by reputation? Design/methodology/approach The methodological approach adopted corresponds to qualitative research of analysis on the reference literature in the international field, also supported by empirical analysis. Findings In this study, the authors show that there is no explicit correlation between sustainability and KM. This relationship, in fact, is not underlined in nonfinancial reporting because it is absent or because it is not considered relevant. Too often sustainability is reduced to a mere relational and reputational tool, ignoring the fact it must be considered a consequence and not the main goal to improve companies’ culture. Research limitations/implications The sample studied by the authors refers to the top 40 companies listed on the Italian market, not allowing to generalize the findings across the international context. Practical implications The practical implications that could result from making explicit the relationship between sustainability and KM are multiple: the substantial benefits of the reputational aspect, an increase in the economic value related to sustainability; to ensure the going concern of the company and implement its ability to produce and share value in the long term. Social implications The social benefits of a stronger relationship between sustainability and KM are related to the possibility to improve the wealth of all the stakeholders. Originality/value This paper analyzes the links between sustainability and KM to understand the influence of these factors on corporate culture and reputation.

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Sustainable Growth Rate and ROE Analysis: An Applied Study on Saudi Banks Using the PRAT Model

Cited by 17 publications

References 24 publications

Moderating effect of bank size on nexus between internal equity capital and financial performance of lower tier commercial banks in Kenya

Moderating effect of bank size on nexus between internal equity capital and financial performance of lower tier commercial banks in Kenya

Impact of COVID-19 on Financial Performance and Profitability of Banking Sector in Special Reference to Private Commercial Banks: Empirical Evidence from Bangladesh

Corporate reputation and culture: the link between knowledge management and sustainability

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