Author: Andreas Dietrich
Publisher:
ISBN:
Category :
Languages : en
Pages : 44
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Book Description
Using a broad bank-level dataset and the GMM estimator technique described by Arellano and Bover (1995), this paper analyzes how bank-specific characteristics, macroeconomic variables, and industry-specific factors affect the profitability of 10,165 commercial banks across 118 countries over the period from 1998 to 2012. Grouping the countries according to three income levels, we show that the determinants of bank profitability included in our model can explain existing profitability differences among commercial banks in low-, middle-, and high-income countries. The profitability determinants vary quite widely across the different levels of income in terms of significance, sign and size of the effect. The level of income has thus an important impact on the determinants of bank profitability.
Author: Asl? Demirgüç-Kunt
Publisher: World Bank Publications
ISBN:
Category : Bancos comerciales
Languages : en
Pages : 52
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Book Description
March 1998 Differences in interest margins reflect differences in bank characteristics, macroeconomic conditions, existing financial structure and taxation, regulation, and other institutional factors. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: * Bank characteristics. * Macroeconomic conditions. * Explicit and implicit bank taxes. * Regulation of deposit insurance. * General financial structure. * Several underlying legal and institutional indicators. Controlling for differences in bank activity, leverage, and the macroeconomic environment, they find (among other things) that: * Banks in countries with a more competitive banking sector-where banking assets constitute a larger share of GDP-have smaller margins and are less profitable. The bank concentration ratio also affects bank profitability; larger banks tend to have higher margins. * Well-capitalized banks have higher net interest margins and are more profitable. This is consistent with the fact that banks with higher capital ratios have a lower cost of funding because of lower prospective bankruptcy costs. * Differences in a bank's activity mix affect spread and profitability. Banks with relatively high noninterest-earning assets are less profitable. Also, banks that rely largely on deposits for their funding are less profitable, as deposits require more branching and other expenses. Similarly, variations in overhead and other operating costs are reflected in variations in bank interest margins, as banks pass their operating costs (including the corporate tax burden) on to their depositors and lenders. * In developing countries foreign banks have greater margins and profits than domestic banks. In industrial countries, the opposite is true. * Macroeconomic factors also explain variation in interest margins. Inflation is associated with higher realized interest margins and greater profitability. Inflation brings higher costs-more transactions and generally more extensive branch networks-and also more income from bank float. Bank income increases more with inflation than bank costs do. * There is evidence that the corporate tax burden is fully passed on to bank customers in poor and rich countries alike. * Legal and institutional differences matter. Indicators of better contract enforcement, efficiency in the legal system, and lack of corruption are associated with lower realized interest margins and lower profitability. This paper-a product of the Development Research Group-is part of a larger effort in the group to study bank efficiency.
Author: Valentina Flamini
Publisher: INTERNATIONAL MONETARY FUND
ISBN: 9781451871623
Category :
Languages : en
Pages : 30
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Book Description
Bank profits are high in Sub-Saharan Africa (SSA) compared to other regions. This paper uses a sample of 389 banks in 41 SSA countries to study the determinants of bank profitability. We find that apart from credit risk, higher returns on assets are associated with larger bank size, activity diversification, and private ownership. Bank returns are affected by macroeconomic variables, suggesting that macroeconomic policies that promote low inflation and stable output growth does boost credit expansion. The results also indicate moderate persistence in profitability. Causation in the Granger sense from returns on assets to capital occurs with a considerable lag, implying that high returns are not immediately retained in the form of equity increases. Thus, the paper gives some support to a policy of imposing higher capital requirements in the region in order to strengthen financial stability.
Author: Asl? Demirgüç-Kunt
Publisher: World Bank Publications
ISBN:
Category : Bank profits
Languages : en
Pages : 30
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Book Description
Countries differ in the extent to which their financial systems are bank-based or market-based. The financial systems of Germany and Japan, for example, are considered bank-based because banks play a leading role in mobilizing savings, allocating capital, overseeing investment decisions of corporate managers, and providing risk management vehicles. The systems of the United States, and the United Kingdom are considered more market-based. Using bank-level data for a large number of industrial and developing countries, the authors present evidence about the impact of financial development, and structure on bank performance. They measure the relative importance of bank or market finance by the relative size of stock aggregates, by relative trading or transaction volumes, and by indicators of relative efficiency. They show that in developing countries, both banks and stock markets are less developed, but financial systems tend to be more bank-based. The richer the country, the more active are all financial intermediaries. The greater the development of a country's banks, the tougher is the competition, the greater is the efficiency, and the lower are the bank margins, and profits. The more under-developed the stock market, the greater are the bank profits. But financial structure per se does not have a significant, independent influence on bank margins, and profits.
Author: Borja Amor-Tapia
Publisher:
ISBN:
Category :
Languages : en
Pages : 30
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Book Description
This study contrasts the reliability of Abnormal ROE (residual income scaled by beginning-of-period book value of equity) estimates based on value drivers with a contextual approach in the commercial bank industry of the OECD countries. We identify the key theoretical variables from the banking and accounting literature and analyze the impact on the prediction of future abnormal ROEs. After regressing the following year's abnormal ROE on those variables, we verify that some of them, related to the competitiveness of banks and the accounting system, play a determinant role. Our evidence suggests that the identification of 'other information' factors, by a contextual approach, might improve the empirical use of the Ohlson Model in commercial banks, especially when they act in competitive environments and/or relevant intangibles are not captured by accounting.
Author: Rubén Chavarín
Publisher:
ISBN:
Category :
Languages : en
Pages : 35
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Book Description
The aim of the present work is to identify the main determinants of profitability for commercial banks established in Mexico. A data base of 45 banks representing virtually the whole world of commercial banking in the period 2007-2013 was used. Dynamic models using Arellano-Bover/Blundell-Bond estimators with an error that follows an MA(1) process were employed along with static models having random effects and Hausman-Taylor estimator. Findings suggest that the profitability of commercial banking is sustained by the level of capital, the charging of commissions and fees, and control of operating expenses, as well as certain market entry barriers and obstacles to competition that provoke a relatively high persistence of profitability.
Author: United States. General Accounting Office
Publisher:
ISBN:
Category : Banks and banking
Languages : en
Pages : 24
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Book Description
Author: Chuling Chen
Publisher: International Monetary Fund
ISBN: 1451871619
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
We use bank level data to study the efficiency of banks in Sub-Saharan African middle-income countries and provide possible explanations for the difference in the efficiency levels of banks. We find that banks, on average, could save 20-30 percent of their total costs if they were operating efficiently, and that foreign banks are more efficient than public banks and domestic private banks. Among the factors that could affect the efficiency levels are macroeconomic stability, depth of financial development, the degree of market competition, strong legal rights and contract laws, and better governance, including political stability and government effectiveness. Our findings point to the importance of policies that aim to build stronger institutions, promote more competition, and improve governance.
Author: Arjeta Hallunovi
Publisher: GRIN Verlag
ISBN: 3668732558
Category : Business & Economics
Languages : en
Pages : 126
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Book Description
Scientific Study from the year 2018 in the subject Economics - Finance, grade: 12, , language: English, abstract: This study examines the determinants of profitability of commercial banks in Albania. These determinants are categorized into two groups, internal factors that are the bank specific factors and external factors that are further divided into macroeconomic factors and industry specific factors. The main objective of the study is to determine the factors affecting the profitability of commercial banks and making some recommendations, that maybe can help the management and policymakers. A panel data with 16 commercial banks in Albania is analyzed for the period 2009-2014. Two indicators are used (dependent variables) for the measurement of profitability, return on assets (ROA) and return on equity (ROE). Banking specific factors that are used in this study include variables such as bank size, asset management, credit risk, liquidity of assets, capital adequacy, operational efficiency and cost of financing. On the other hand is taken into consideration only one industry specific factor, which is the concentration and macroeconomic factors such as GDP, inflation and exchange rate. To meet the main object of the research, the study is based mainly on quantitative research method, which is supplemented by a qualitative method. Quantitative data were obtained mainly from the financial statements of commercial banks, by INSTAT, Bank of Albania, and World Bank, in order to make empirical analysis needed to identify and measure the determinants of bank profitability. In particular, multiple regression analysis was used to measure the impact of the determinants of bank profitability. On the other hand, qualitative data were collected through unstructured interviews conducted with executives of finance in the albanian commercial banks. To realize empirical analysis were used the software SPSS 22 and Eviews 7.
Author: Moges Endalamaw Yigermal
Publisher:
ISBN: 9783668653283
Category :
Languages : en
Pages : 20
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Book Description
Scientific Essay from the year 2017 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, language: English, abstract: The main objective of the paper is to analyze the impact of bank specific and macro-economic factors on the profitability of selected Ethiopian private commercial banks over the period of 2005 to 2014. To meet the objective, both descriptive and random effect panel econometrics method of data analysis has been employed. The study uses both return on asset (ROA) and return on equity (ROE) as a measurement for banks profitability. Private Banks profit after tax gets increasing year after year and their ROA is found to be three percent on average. The deposit share of private commercial banks reached above 30 percent in 2014, while it was only 10 percent in 2000. The panel econometrics result shows that, the variable bank size and GDP growth rate has a positive and significant impact on private commercial banks ROA and ROE. While, interest rate spread has a negative and significant impact. The variable Loan to deposit ratio has negative and significant impact on banks ROA while, it has no effect on their ROE. Inflation also an important variable in explaining ROA at 10% significant level but, it has no effect on ROE. The other important variable in explaining ROE is loan concentration index it has positive and significant impact on banks ROE. But, it does not significantly explain ROA. As a recommendation the significant and positive impact of Bank size can be taken as a good signal for commercial banks to merge and to have scale advantage. The significant impact of macro-economic variables in explaining banks profit is an indicator to designed policies that promote sustainable output growth and controlling inflation to have stable banking sector.
