Bank-specific vs. macro-economic factors: what drives profitability of commercial banks in Saudi Arabia

Abstract

The goal of this study is to determine the elements that contribute to the profitability of commercial banks in Saudi Arabia. The study is important due to the fact that Saudi vision 2030 foresees Saudi Arabia as a global investment powerhouse and fulfilling this objective requires a profitable banking sector. The method chosen for the study is multiple regression analysis. The sample data is taken for the period ranging 2009 and 2015 for the 12 local banks. The research concludes that bank’s internal factors specifically, bank size, liquidity, credit risk and operational efficiency are significantly determining the profitability in the banks as compared to the economy’s macro-economic variables.

Impact of Macroeconomic and Bank-Specific Variables on the Profitability of Commercial Banks in Nepal

“…The positive impact of bank size shows scale efficiency, implying that earnings may improve as the size of these banks grows. This finding is consistent with those of Husain and Abdullah (2008); Paolucci and Menicucci (2016); Hashem (2016); Kawshala and Panditharathna (2017); Yahya et al (2017); Shamim et al (2018); Almaqtari et al (2019); Jadah et al (2020); Kosumi and Kosumi (2021);and Abdulazeez (2022). The explanatory variable credit risk was shown to be statistically significant at a 5% significance level, and it had a positive association with bank profitability as evaluated by NIM.…”

Competition, Survival Issue, and Performance Constraints of Banks: Evidence from Ethiopian Private Commercial Banks

“…Assfaw [45], Eric et al [30], and Gautam [31] in their studies found positive and signifcant relationship between management efciency and banks' proftability. However, the results of Shamim et al [46], Mahmud et al [34], and Petria et al [35] were not complemented with the abovementioned fndings; in contrast, they concluded that the relationship between management capability and bank performance is negative.…”

Factors Affecting Profitability of Commercial Banks and Directions of its Improvement

“…Analysis of recent researches and publications. Problems of providing profitability and financial stability of commercial banks in the national economy are highlighted in works of many leading domestic and foreign scientists, namely: A. Alshatti [1], A. Banerjee, E. Duflo [2], P. Bustos, G. Garber, J. Ponticelli [3], F. Shamim, B. Aktan, M. Abdulla, N. Yaseen Sakhi [4], E. Gilje, E. Loutskina, P. Strahan [5], R. Iyer,M. Puri [6], L. Sloboda, N. Dunas, A. Limański [7], T. Alzoubi,O.…”