What determines the profitability of non-bank deposit taking institutions?: some evidence from Mauritius

Jugurnath, Bhavish; Ayush, Rucktooa; Sheereen, Fauzel; Soondram, Hema

doi:10.1353/jda.2017.0099

Cited by 5 publications

(4 citation statements)

References 9 publications

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“…The largest portions of these studies are devoted to analysing the profitability determinants of banks which operated in a specific country. Examples of these single-country research studies are those for the USA (Chaudhry et al , 1995; Tregenna, 2009; Hoffmann, 2011; Kanas et al , 2012; Chronopoulos et al , 2015; Ding et al , 2017), UK (Kosmidou et al , 2005; Saeed, 2014), Japan (Liu and Wilson, 2010), Spain (Trujillo-Ponce, 2013), Italy (Albertazzi et al , 2016), India (Badola and Verma, 2006; Manoj, 2010; Bhatia et al , 2012; Sufian and Noor, 2012; Karimzadeh et al , 2013; Sinha and Sharma, 2016; Davis and Mathew, 2017), China (Garcia-Herrero et al , 2009; Heffernan and Fu, 2008; Garcia-Herrero et al , 2009; Tan and Floros, 2012; Lee and Hsieh, 2013; Yin and Matthews, 2016; Ding et al , 2017; Tan et al , 2017), Hong Kong (Jiang et al , 2003), Switzerland (Dietrich and Wanzenried, 2011), Brazil (Afanasieff et al , 2002), Latvia (Jurevičienė et al , 2015), Lithuania (Jurevičienė et al , 2015; Naruševicius, 2018), Greece (Mamatzakis and Remoundos, 2003; Athanasoglou et al , 2005; Alexiou and Sofoklis, 2009), Turkey (Sayilgan and Yildirim, 2009; Alper and Anbar, 2011; Akbaş, 2012; Macit, 2012; Acaracvi and Calim, 2013, Ayaydın and Karakaya, 2014; Turgutlu, 2014; Ozgur and Gorus, 2016; Topak and Talu, 2017), Albania (Duraj and Moci, 2015), Vietnam (Le, 2017), Mauritius (Bhavish et al , 2017), Nigeria (Obamuyi, 2013; Chidozie and Ayadi, 2017; Ebenezer et al , 2017), Ethiopia (Rani and Zergaw, 2017; Akinkunmi, 2017), Pakistan (Gul et al , 2011; Sohail et al , 2013; Kanwal and Nadeem, 2013; Shoaib et al , 2015), Bangladesh (Majumder and Uddin, 2017), Tunisia (Bougatef and Bougatef, 2017), Indonesia (Agustini and V...…”

Section: Literature Overviewmentioning

confidence: 99%

What does affect profitability of banks in Croatia?

Fidanoski

Choudhry

Davidović

et al. 2018

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Purpose The paper aims to determine the impact of bank-specific, industry-specific and macro-specific determinants on the profitability indicators – return on assets (ROA) and ratio net-interest margin (RNIM). Design/methodology/approach This research sample includes selected Croatian banks, and the empirical analysis covers the period 2007-2014. Based on the reliable and robust econometric tests, dynamic estimation technique (DOLS) was run to estimate the profitability models, by using of ROA and RNIM as dependent variables, which also include lagged dependent variables to capture the speed of mean reversion in terms of profitability, respectively. Findings The results proved the crucial positive impact of assets size (economies of scale), loan portfolio and GDP growth on the banks’ profitability. Further, the negative impacts on profitability have risks and administrative costs. This paper shows the positive impact of capital adequacy ratio (CAR) and leverage on ROA and RNIM, as well as the correlation between market concentration and banks’ profitability. Practical implications Basically, Croatian banks should improve operative efficiency and risk management practice to increase their profitability. In addition, banks should carefully balance between capital base and risk exposure on the one hand and take advantage of using relative cheaper deposits and borrowed funds instead of using more expensive equity. This conclusion is reasonable, keeping in mind that the Croatian financial market does not punish banks for an extra risk exposure caused by market imperfections. Finally, the regulatory authority in Croatia should impose some additional antitrust measures to increase competition in the banking market. Originality/value Although a bunch of existing studies explain the determinants of bank profitability from different perspectives, this paper conducts a specific empirical analysis about the determinants of bank profitability in Croatia. In addition, this paper provides a good synthesis of the relevant empirical and theoretical studies from this domain.

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Section: Literature Overviewmentioning

confidence: 99%

What does affect profitability of banks in Croatia?

Fidanoski

Choudhry

Davidović

et al. 2018

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“…We do not consider data from years beyond 2019 due to the onset of the COVID-19 pandemic in India in late January 2020. Following previous studies by Imtiaz et al [16] and Bhavish et al [17], we build a fixed effects regression model to estimate the effect of HFC size, interest expense costs, compensation costs and HFC ownership characteristics on HFC profitability measured using Return on Assets (See Eq.1). We use one-year lagged values of explanatory variables to partially alleviate the issue of endogeneity in our regression results (See Table I for the definitions).…”

Section: Methodsmentioning

confidence: 99%

Determinants of Profitability in Indian Housing Finance Companies: An Empirical Analysis

Sharma

Kumar

2023

IJMH

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Housing Finance Companies (HFCs) are essential non-banking financial institutions (NBFIs) in emerging economies where housing remains an active area of development. To ensure that low-cost and hassle-free housing finance is accessible to customers, it is crucial that HFCs function profitably. While previous studies have studied determinants of risk in financial intermediaries that provide housing finance, this is the first study which focuses on the issue of profitability in the case of HFCs. Specifically, this empirical study identifies determinants of profitability in the case of Indian Housing Finance Companies (HFCs) using the panel data regression method. The study employs a panel dataset of 57 Indian HFCs for the period 2011-2019. The profitability of HFCs is measured using the Return on Assets ratio. The results present three interesting findings. First, HFCs with a larger size exhibit higher profitability, suggesting that smaller HFCs face diseconomies of scale and scope. Second, an increase in interest expenses and compensation to employees is associated with reduced HFC profitability. Lastly, ownership characteristics of the HFC are key determinants of profitability. Specifically, we find that being a subsidiary of a commercial bank increases HFC’s profitability. Contrarily, being government-owned and being affiliated to a large business group is negatively associated with HFC profitability.

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“…Unfortunately, it is not clear what the impact of these reforms is on the profitability of the banking sector as studies show mixed effect of these reforms on banks in Nigeria. Moreover, Bhavish, Ayush, Sheereen, & Hema, (2017) noted that banks are influenced by factors both internal and external. They identified the internal factors to include equity ratio, bank size, deposit size etc while the external factors include gross domestic product, exchange rate, interest rate etc.…”

Section: Introductionmentioning

confidence: 99%

A comparative analysis of the determinants of profitability of commercial and microfinance banks in Nigeria

Tosin

Otonne

2020

IJFAM

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The study aims to examine the determinants of profitability of commercial and microfinance banks in Nigeria, in order to be able to highlight the possible effect of Central Bank of Nigeria policy actions in influencing the internal factors and subsequently the profitability of the banks in Nigeria. Research methodology: The study adopted the panel data research design. Out of the total number of 22 commercial banks and 898 microfinance banks the study sampled 4 commercial banks and 4 microfinance banks using random sampling technique, and based on the availability of data. Data were sourced from the annual balance sheets and income statement of banks from 2010 to 2018 and analysed using the Random Effect Panel Estimation Technique. Finding: Findings from the study show that liquidity ratio is not a strong determinant of banks profitability whether commercial or microfinance banks while capital adequacy is a significant determinants of the profit level in both banks with positive effect for microfinance and negative effect for commercial banks. The study also found that real GDP is a significant determinant of only commercial banks profitability. This by implication indicates that the recent policy action by the central bank which saw the increase of cash reserve ratio from 22.5% to 27.5% is expected to have an insignificant reduction on the profitability of the banks. Limitation:The major limitation of the study is the use of a single measure of profitability and a single measure of external factor. The study period as well as its sample size was also considered as limitation. Contribution: Findings from this study are useful to the management of the banks, the selected banks to be more specific, and shareholders. Also, this study provides insights on the possible effect of the recent policy of the Central Bank on the banking sector. Thus, the results of this study are useful to policy makers and regulators of the financial system in Nigeria.

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What determines the profitability of non-bank deposit taking institutions?: some evidence from Mauritius

Cited by 5 publications

References 9 publications

What does affect profitability of banks in Croatia?

What does affect profitability of banks in Croatia?

Determinants of Profitability in Indian Housing Finance Companies: An Empirical Analysis

A comparative analysis of the determinants of profitability of commercial and microfinance banks in Nigeria

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