The determinants of bank profitability: A cross-country analysis

Le, Tu; Ngo, Tuan

doi:10.1016/j.cbrev.2020.04.001

Cited by 170 publications

(161 citation statements)

References 53 publications

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“…Moreover, the growth of deposit is another determinant of bank profitability (Le, Tzeremes, & Ngo, 2020;Panta, 2018). This strand of the literature argues that bank deposit is a relatively cheap bank asset for banks; hence, it tends to increase profitability.…”

Section: Brief Literature Reviewmentioning

confidence: 99%

Is there a nonlinear relationship between nonperforming loans and bank profitability? Evidence from dynamic panel threshold

Bolarinwa

Olayeni

2021

Manage Decis Econ

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This study examines the threshold effect in the nonperforming loans–profitability nexus within the Nigerian banking industry. Using the innovative dynamic panel threshold of Seo, Kim, and Kim (2019), the work documents threshold levels of 3.5% and 5.0% of nonperforming loans for return on average assets (ROAA) and return on average equity (ROAE), respectively. These levels of nonperforming loans ensure equilibrium profitability without stability trade‐off in the industry. Similarly, the robust models suggest the threshold of 5.2% and 2.81% of impaired loans for optimal ROAA and ROAE, respectively. The results are important for policy formulations. It is recommended that the Central Bank of Nigeria (CBN) should review the 5% threshold nonperforming loans adopted in the industry in 2019 prudential guidelines to ensure stability in the Nigerian banking industry.

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Section: Brief Literature Reviewmentioning

confidence: 99%

Is there a nonlinear relationship between nonperforming loans and bank profitability? Evidence from dynamic panel threshold

Bolarinwa

Olayeni

2021

Manage Decis Econ

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“…In addition to ROA and ROE, scholars have also used net interest margin (NIM) as a measure of bank performance (Le & Ngo, 2020;Robin et al, 2018;Siddik et al, 2016). Researchers argued that ROE could be increased by many factors, for example, government intervention, which could result in inconsistent results (Onay et al, 2008).…”

Section: Dependent Variables: Profitability Measuresmentioning

confidence: 99%

Effects of E-Banking Adoption on the Financial Performance of State-Owned Commercial Banks in Bangladesh

Hossain

2021

Information Resources Management Journal

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This study examines the relationship between e-banking adoption and the financial performance of state-owned commercial banks in Bangladesh. The pooled ordinary least square (OLS) estimate was applied to analyze the panel data of the sample banks. The empirical findings reveal that e-banking adoption and implementation has a significant negative impact on banks' profitability in terms of return on assets, return on equity, and net interest margin in the year of adoption. However, the result also shows that e-banking has a significant positive impact on return on assets in the year following adoption.

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“…First, on a panel of countries, the generalized method of moments (GMM) was employed by many researchers. Dq & Ngo (2020) However, in the same context (i.e. panel of countries), other studies used a fixed effect model (FEM) as an estimation method.…”

Section: Literature Reviewmentioning

confidence: 99%

Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach

Bekhet¹,

Al-smadi²,

Khudari³

2020

IJFR

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This article assesses the effects of internal and external factors on the profitability of Jordanian commercial banks. A panel data set of thirteen commercial banks between 2000 and 2018 was used. Pooled ordinary least squares, random and fixed models were applied. Moreover, a Hausman test was performed to confirm the suitability of models, which was preferred on the random effect model. Also, a Wooldridge test for serial correlation and a modified Wald test for groupwise Heteroskedasticity were used and both of their null hypotheses were rejected. However, to deal with these problems, a robustness analysis was performed using feasible generalized least square. The findings suggested that internal factors and in particular, bank size and diversification, had positive effects on bank profitability, while credit risk, operational risk and leverage risk were negatively related to bank performance. However, capital risk had a positive but insignificant impact on bank profitability. As for the effect of external factors, the results suggested that financial development and inflation had a positive and significant impact on bank profitability, while market concentration and stock market volatility had a significant negative effect on bank profitability. Further, a negative and insignificant impact were found for GDP and refugee crisis on bank profitability in Jordan. The findings would help managers of commercial banks, investors, government, policy makers and shareholders to make better decisions and improve performance by highlighting areas of weaknesses. In general, policy makers should become more aware with these insights on profit determinants in Jordanian commercial banks.

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The determinants of bank profitability: A cross-country analysis

Cited by 170 publications

References 53 publications

Is there a nonlinear relationship between nonperforming loans and bank profitability? Evidence from dynamic panel threshold

Is there a nonlinear relationship between nonperforming loans and bank profitability? Evidence from dynamic panel threshold

Effects of E-Banking Adoption on the Financial Performance of State-Owned Commercial Banks in Bangladesh

Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach

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