Determinants of Bank Profitability in the Context of Financial Liberalization: Evidence from Morocco

Abstract

This article aims, in the context of financial liberalization, to examine the impact of several internal and external factors in relation to the profitability of banks listed on the Moroccan stock exchange. The study uses the panel data method on a sample of the six banks with the largest market shares over the 2010–2019 period to investigate the influence of ownership structure, bank governance, capital structure, prudential regulation, and also a macroeconomic variation on bank profitability. Accordingly, the empirical results indicate a negative relationship between concentration, foreign ownership, and bank profitability. Further, high capital structure ratios, especially solvency, liquidity, and capitalization ratios appear to have an undesirable effect on the performance of Moroccan banks. In contrast, the impact of domestic institutional ownership is positive, implying that profitability is more favored by domestic ownership than by foreign ownership. Our findings also highlight the importance of independent directors and board size. Therefore, liberalizing ownership and opening up the board to the expertise of outside directors is essential for the banking sector’s development. In terms of policy implications, central banks and regulators need to ensure that banks rigorously adhere to specified leverage and fixed capital adequacy ratios while ensuring optimal liberalization for bank performance.

Analisa Dampak Rasio Keuangan Perbankan Terhadap Profitabilitas Bank Berdasarkan Modal Inti (Kbmi) Pada Kelompok Bank Di Indonesia

“…Sementara itu, rasio solvabilitas, leverage, dan likuiditas yang lebih rendah dianggap sangat menguntungkan, karena bank tidak terlalu bergantung pada utang dan pembiayaan pinjaman dan tidak perlu menggunakan arus kas tambahan untuk membayar utang. Oleh karena itu, bank-bank yang bermodal kuat akan mendapatkan keuntungan yang lebih tinggi (Belcaid & Al-Faryan, 2023). Mendorong bank untuk memiliki rasio modal yang tinggi, rasio modal yang tinggi dapat sejalan dengan profitabilitas yang tinggi.…”