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The Impact Of Bank-Specific And Macroeconomic Characteristics On The Banking Profitability In Egypt
1. The Impact Of Bank-Specific And Macroeconomic Characteristics On
The Banking Profitability In Egypt
A Thesis Submitted In Partial Fulfilment Of The Requirements For The Degree Of
Master Of Business Administration (MBA)
By:
Mohamed Abdel-Raouf Kenawy
mohamed_qenawy@nbe.com.eg
mohamed_qenawy@outlook.com
Supervised By:
Dr. Mina Sami Ayad
Date Of Submission
January 2020
2. - ii -
ABSTRACT
This Thesis Extends The Literature Of (Sehrish Gul, Faiza Irshad, And Khalid Zaman, 2011) Factors
Affecting Bank Profitability In Pakistan, And (R.A. Supriyono, Heyvon Herdhayinta, 2019) Determinants
Of Bank Profitability: The Case Of The Regional Development Bank (BPD Bank) In Indonesia By Covering
A New Country And A New Long Time Period. Objective Of This Paper Is To Measure And Analyze The
Impact Of Internal Bank And External Macroeconomics Characteristics On Profitability For The Banking
Sector In Egypt During 22 Years. Using Data In Egypt Over Period Between 1996 To 2017 And The
Technique Of Ordinary Least Square (OLS) On The Pooled Sample, The Research Examines That Inflation
And Net Interest Margin Have A Significant Positive Impact On ROE.
Keywords: Bank Profitability, Return On Equity ROE, Inflation, Net Interest Margin NIM, Egypt
3. - iii -
ACKNOWLEDGEMENT
As The Author Of The Thesis, I Would Like To Send My Appreciation To My Family For Their
Patience And Encouragement, To My Professors About Giving Me The Chance For Learning And Sharing
Knowledge, Finally To My Friends And Colleagues In Our Reputable Corporation National Bank Of Egypt.
Special Thanks To Dr. Mina Sami Ayad For Teaching Me How To Build A Scientific Research And
To Start Where The Others Have Ended.
5. - v -
LIST OF TABLES
Table 1: ROE & INF β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦5
Table 2: ROE & NIM β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦...5
Table 3: The estimated value for the influence of INF on ROE β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦.10
Table 4: The estimated value for the influence of NIM on ROE β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦10
6. - vi -
LIST OF FIGURES
Figure 1: ROE over period β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦6
Figure 2: Inflation over period β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦..6
Figure 3: ROE & Inflation over period β¦β¦β¦β¦β¦β¦β¦β¦..β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦...6
Figure 4: Net Interest Margin over period β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦.7
Figure 5: ROE & Net Interest Margin over period β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦7
Figure 6: Schematic Diagram, Determinants of Bank Profitability β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦β¦..8
7. - 1 -
1 INTRODUCTION
Nowadays, The Banking Sector In Egypt Is Witnessing A Great Development. A New Banking Law
Draft Will Take Time To Be Discussed Within The Economic Committee Of The Egyptian Parliament,
Given That The Project Aims To Keep Pace With The Country Standards That Have Changed Since The
Date Of The Current Law Issuing To Banks Until Now And To Follow The Last Developments In The
International Banking Sector. The Ability Of Small Banks Will Become Less In The Face Of New Issues,
Especially The Bank Capital Increase To 5 Billion Pounds, Which Stimulates Mergers And Acquisitions.
This Thesis Extends The Literature Of (Sehrish Gul, Faiza Irshad, And Khalid Zaman, 2011) Factors
Affecting Bank Profitability In Pakistan, And (R.A. Supriyono, Heyvon Herdhayinta, 2019) Determinants
Of Bank Profitability: The Case Of The Regional Development Bank (BPD Bank) In Indonesia By Covering
A New Country And A New Long Time Period.
Objective Of This Paper Is To Measure And Analyze The Impact Of Internal Bank And External
Macroeconomics Characteristics On Profitability For The Banking Sector In Egypt During 22 Years.
The Researcher Of This Paper Is Interested Of That Topic Because Of The Banking Sector Is A
Cornerstone For Increasing The Economic Growth Within Egypt. There Is No Doubt That Increasing
Profitability Of Banks Helps In Increasing Production And The Size Of Businesses By Contributing To
Increase The Credit Facilities Required For Investors And Traders. So There Will Be Increasing In Jobs,
Then Standard Of Living Of The Individual And The Family Will Be High.
Using Data In Egypt Over Period Between 1996 To 2017 And The Technique Of Ordinary Least
Square (OLS) On The Pooled Sample, The Research Examines That Inflation And Net Interest Margin Have
A Significant Positive Impact On ROE.
Hence, These Results Are Really Important At The Level Of Individuals And Policy Makers, As
Concerning On Studying And Analyzing The Determinants Of Bank Profitability To Maximize Economic
Growth, The Size Of Investments. These Studies Will Create A New Investment Environment That Raises
Growth Rates And Reduces Unemployment By Creating Jobs With Better Salaries. It Is Also Important For
Top Management To Take The Right Decision After Studying The Factors That Improves The Profitability.
As A Policy Recommendation, The Banking Sector Needs More Studies About Deciding The Net Interest
Margin And Its Significant Correlation With The Bank Profitability. And Such The External Causes Like
Inflation.
Structure Of Thesis Is As Follows Sequentially: Literature Review, Data & Descriptive, Methodology,
Empirical Results And Conclusion.
8. - 2 -
2 LITERATURE REVIEW
The Literature Review Will Follow The Historical Approach
According To H. Khrawish, N. Al-Sa'di, (2011) By Using Data Covering The Period From (2000 To
2009) On Jordan, They Found That There Is No Impact Of E-Banking Services On Bank Profitability.
However The Data Period Was Limited, The Paper Focused In One Country And The Electronic Banking
Services Is A New Topic Which May Be Changed If The Researchers Used Different Samples And Another
Methods Of Analysis.
Mingfeng Lin, Henry C. Lucas, And Jr.,Joseph P. Bailey (2011) Explain That Internet Banking
Adoption Improves Bank Performance By Analysing A Comprehensive Dataset Between 2003 To 2008 Of
United States Banks. The Internet Banking Have A Positive Impact Though It Is New And Rapidly
Changing.
Searching About The Factors That Affecting The Bank Profitability In Pakistan. S. Gul, F. Irshad And
KH. Zaman (2011) Although Covering A Limited Data And Period For Just 4 Years From 2005 To 2009
But Their Paper Introduces Many Internal And External Parameters Such As (Size, Capital, Loans, Deposits,
Gdp, Inflation, Market Capitalization). All The Parameters Have A Positive Impact With ROE Except
Capital And Market Capitalization. I Agree With The Researchers In This Study.
Unsurprisingly, The Literature Shows Mixed Results. Z. Abaenewe, O. M. Ogbulu, M. O. Ndugbu
(2013) Show The Positive Association Between Electronic Banking And ROE. The Researchers Have A
Sample Covering The Period From 1997 Till 2013 In Nigeria, I Found The Time Period Is Fair But Still For
One Sample.
Regarding To The Variables That Have Impact On ROE, The Study Concluded That There Is An
Inverse Relationship Between Profitability And Banksβ Liquidity, Size, Capital Strength, GDP. Although
The Inflation Variable Effects Positively In India For The Period Since 1999 To 2011 Which Was So
Limited Time. (N. Thota, 2013)
For A Limited Time Just Five Years (2008-2013) In Ethiopia. Olani B. Sakilu, Berhanu G. Kibret
(2015) Find That Qualified Directors In The Board, Directors With Prior Experience In Banking, Chief
Executive Officer Compensation And Existence Of Risk Management Committee In The Board Have A
Positive Significant Impact, Ownership Dispersion And Frequency Of Board Meeting Have A Negative
Influence On The Bank Profitability. However There Is No Impact With Board Size, Female Director In The
Board, And The Existence Of Audit Committee In The Board. I Found The Paper Is Full Of Independent
Variables That Have Influence On The Financial Performance.
9. - 3 -
Hameedah Sayani, Pallavi Kishore, Vijaya Kumar (2017) Introduce That Capital Adequacy
Ratio (CAR) And Assets Quality (AQ) Have A Positive Significant Relation On The Bank Profitability In
United Arab Emirates In The Period (2008-2015). Earnings Ability (EA) Liquidity Ratio (LR) Have
Insignificant Effect.
Nevertheless, The Study Has A Limited Period For One Year (2014 β 2015), Asadul Islam, Nazirul
Sarker, Mahabub Rahman, Arifin Sultana, Shafiullah Prodhan (2017) Highlight The No Impact Association
Between Asset Size, Net Interest Margin (NIM) And ROE In Bangladesh. A Negative Correlation Between
Asset Quality (NPL) And Profitability.
Nouran M. Kassem, Ahmed Sakr (2018) Through Using Data Focused The Period From 2007 Till
2016 In Egypt Show That Capital Ratio, Loan Ratio, Deposit Ratio, And Loan Loss Provisions Ratio
Negatively Affect On The Banking Profitability Which Measured By ROE. But Bank Size Have A Positive
Significant Influence.
The Effect Of Internal (Bank Specific) And External (Industry Specific And Macroeconomic) On
Bank Profitability Is Considered By The Study Of (M. G. Abobakr, 2018) Is Positive And Negative
Sequentially For A Time From 2006 To 2015 On Egypt.
Y. Halim, S. El Sheikh (2018) Assert That Customer Satisfaction Influence Positively On ROE In
Egypt. And I Agree With The Researcher Though The Data Was Limited For One Conventional Bank And
Another Islamic Bank.
Eddy Sutanto, David Sudarsono (2018) Found That The Correlation Between Branch Network, Brand
Value And ROE Is Positive But Capital Adequacy Ratio (CAR) Is A Negative Relation In A Sample Of
Indonesia Covering A Limited Time From 2013 To 2015.
Reading Into What Ahmad Abbas, Ainun Arizah (2019) Said That Marketability Have A Significant
Positive Relation With Profitability. By Using Data From (2011 β 2016) In Indonesia. I Found The Data
Was Limited For Just Islamic Banks.
Liquidity Creation Influences In The Banking Financial Performance Negatively By Using Sample In
Middle East and North Africa Countries (MENA) CoveringThe Period Between 2011 To 2016. Ahmad
Sahyouni, Man Wang (2019) However,The Different Countries And The Limited Time Of The Study.
(A. M. Alsartawi, 2019) The Composition Of The SharΔ«ΚΏah Supervisory Boards (Independence And
Frequency Of Meetings) Is Negatively Influence On The Profitability Of Banks In Gulf Cooperation Council
(GCC) Covering A Limited Period From 2013-2017.
10. - 4 -
By Using A Data For Limited Time Starts From 2011 To 2013 In Gulf Cooperation Council (GCC),
Intellectual Capital Have A Positive Impact On ROE. A. A. Ousama, H. Hammami, M. Abdulkarim (2019).
The Paper Were Possible To Be More Informative If It Focuses On A Long Period And Fewer Numbers Of
Countries.
On The Other Hand, (A. Al-Harbi, 2019) Who Has A Sample Of 57 Countries In The Organisation Of
Islamic Cooperation (OIC) With A Data From 1989 Till 2008 Explains The Positive Relation Between The
Banking Sector Development, Loans And ROE. Although The No Impact Relation By GDP Per Capita,
Market Capitalization, And Bank Size On The Profitability Of Banks. The Study Also Introduces That
Deposits Effect Negatively.
"Capital Adequacy Ratio (CAR), And Loan To Deposit Ratio (LTDR) Has A Positive Impact On
ROE, However Non-Performing Loan Ratio (NPLR) And Loan-Loss Provision Ratio (LLPR) Influence
Negatively On Profitability In Bangladesh (2006-2015)" Zahidul Islam, Badrul Alam, Motaher Hossain
(2019).
(K. Ramesh, 2019) Suggests That Nonperforming Asset And Intermediation Cost To Total Assets
Have An Inverse Relation With ROE. Non-Interest Income And Net Interest Margin (NIM) Have A Positive
Impact While Capital Adequacy Ratio (CAR) Has Insignificant Correlation With ROE Using Data For India
From 2009 To 2017.
According To Radhe S. Pradhan, Yooba Raj Gautam (2019), The Current Ratio And Investment Ratio
Have A Positive Association While Liquid Asset Ratio Affects Negatively On The Banks' Profitability In
Nepal For A Covered Period Since 2009 to 2015.
R.A. Supriyono, H. Hekrdhayinta (2019) Through Using Data For A Few Years From 2011 Till 2015
Focusing In Indonesia Highlighted That Natural Log Of Total Assets, Natural Log Of Total Core Capital,
Capital Adequacy Ratio, Non-Performing Loan, Operating Expenses / Operating Income, Natural Log Of
Money Supply, Inflation, And Bank Interest Rate Have A Negative Significant Correlation With ROE,
Although Loan To Deposit Ratio, Net Interest Margin Have A Positive Relation. The Paper Analysed Many
Parameters That Have Impact On The Dependent Variable. Though, The Time Of The Paper Was Limited
And The Sample Was Just In One Country.
In Keeping With What The Ex-Researchers Said About The Impact Of Inflation And Net Interest
Margin On Bank Profitability, The Literature Shows Mixed Results.
11. - 5 -
3 DATA & DESCRIPTIVE
The Thesis Obtained A Data From The Website Of Federal Reserve Economic Data (Fred St Louis)
For Egypt And A Period Of 22 Years From 1996-2017.
The Following Table Presents The Main Descriptive Statistics For The Variables (Return On Equity,
Inflation) Covered In This Study:
date roe inf
Min. :1996 Min. : 7.248 Min. : 2.270
1st Qu.:2001 1st Qu.:10.307 1st Qu.: 4.537
Median :2006 Median :13.922 Median : 8.482
Mean :2006 Mean :13.716 Mean : 8.901
3rd Qu.:2012 3rd Qu.:15.077 3rd Qu.:11.039
Max. :2017 Max. :22.590 Max. :29.502
Table (1) ROE & INF
The Above Table, Which Shows Minimum, Maximum, Median, And Mean Value. It Shows That
The Study Is Covering The Period From 1996 To 2017. In General It Is Totally Clear That All Dependent
And Independent Variables Mean Are Greater Than Zero. Besides, Regarding Our Dependent Variable Bank
Profitability Which Is Measured In Our Study By Return On Equity (ROE), The Minimum Percentage Is
7.24% , The Maximum Percentage Is 22.59%, The Median Is 13.92%, And The Mean Is 13.71%.
Concerning The Independent Variable (INF), The Minimum Percentage Is 2.27% , The Maximum
Percentage Is 29.50% Which Clearly Was Influenced After The Time Of Egyptian Pound Floating, The
Median Is 8.48%, And The Mean Is 8.90%.
The Other Following Table Presents The Main Descriptive Statistics For The Variables (Return On
Equity, Net Interest Margin) Used In The Thesis:
date roe nim
Min. :1996 Min. : 7.248 Min. :1.253
1st Qu.:2001 1st Qu.:10.307 1st Qu.:1.521
Median :2006 Median :13.922 Median :1.818
Mean :2006 Mean :13.716 Mean :2.311
3rd Qu.:2012 3rd Qu.:15.077 3rd Qu.:3.419
Max. :2017 Max. :22.590 Max. :4.133
Table (2) ROE & NIM
The Above Table Shows That The Study Is Covering A Period Of 22 Years, Referring To The
Independent Variable (NIM), The Minimum Percentage Is 1.25% , The Maximum Percentage Is 4.13%, The
Median Is 1.81%, And The Mean Is 2.31%.
12. - 6 -
Figure (1) ROE over period
The Above Figure Shows That The Evolution Of The Dependent Variable (ROE) Over Time In The
Study Is Increasing.
Figure (2) Inflation over period
The Above Figure Shows That the evolution of The Macroeconomic Variable (INF) Over Time In
The Study Is Increasing.
Figure (3) ROE & Inflation over period
The Above Figure Shows That There Is A Positive Correlation Between Return On Equity And
Inflation Over Time In The Thesis.
13. - 7 -
Figure (4) Net Interest Margin over period
The Above Figure Shows That the evolution of The Bank Specific Variable (NIM) Over Time In The
Study Is Increasing.
Figure (5) ROE & Net Interest Margin over period
The Above Figure Shows That There Is A Positive Correlation Between Return On Equity And NIM
Over Time In The Thesis.
14. - 8 -
4 Methodology
The Panel Data Set Covers A 22-Years Period, With A Sample Of Egyptian Banks The Data Were
Taken From Federal Reserve Economic Data. All Data Is Nominated In Terms Of Percentage. The Basic
Estimation Strategy Is To Pool The Data And Apply The Regression Analysis By Using The Technique Of
Ordinary Least Square OLS On The Pooled Sample. The following Equation Will Be Estimated In The
Form Of:
π = π + π½π1 + π½π2 + Ξ΅
π ππΈ = π + π½πΌππΉ + π½ππΌπ + Ξ΅
Where "Y" Is The Profitability Of Banking Sector Which Is Measured By ROE. For The Independent
Variables; "INF" Is Inflation, "NIM" Is The Net Interest Margin, "π½" Refers To The Estimated Value That
Will Expresses The Relation Between Y & X, And "Ξ΅" For The Residual That Explains The Other Variables.
These Models Are Tested For Periods From 1996 To 2017.
4.1 Theoretical Framework
The Thesis Assumes That There Is An Impact Between The Independent Variables And The
Dependent Variable. The Dependent Variable In This Research Refers To Banks' Profitability And The
Independent Parameters, Internally And Externally.
Figure (6) Schematic Diagram, Determinants of Bank Profitability
Source: Self extracted
15. - 9 -
4.2 Conceptual Framework
4.2.1 Dependent Variables
Return On Equity (ROE): "It Is A Profitability Indicator That Measures The Return To Shareholders
On Their Equity Invested. It Is Ratio Of Net Income To Total Equity. A Higher ROE Indicates That The
Bank Is In A Strong Managerial Position."
4.2.2 Independent Variables
Net Interest Margin (NIM): "A Measure Of The Difference Between The Interest Income By Banks
And The Amount Of Interest Paid Out To Their Lenders."
Inflation Rate (INF): "A Measure That Shows The Rise In The Level Of Prices And Services In A
Country's Economy Over A Period Of Time."
4.3 Hypotheses
Hypothesis 1: There Is A Correlation Between ROE And Inflation.
Hypothesis 2: Net Interest Margin Has A Major Impact On ROE.
16. - 10 -
5 EMPIRICAL RESULTS
The Results Show That There Is Effective Evidence That Both Of The Internal Factors In The
Banks Represented By The Net Profit Margin And The External Economic Factors That Were Indicated To
One Of Its Most Important Determinants, Which Is Inflation, Have A Positive Impact On Profitability.
Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept) 10.2616 1.4038 7.310 4.56e-07 ***
inf 0.3881 0.1305 2.975 0.00749 **
---
Signif. codes: 0 β***β 0.001 β**β 0.01 β*β 0.05 β.β 0.1 β β 1
** shows correlation is significant at 0.01 level.
Table (3) the estimated value for the influence of INF on ROE
The Above Table Indicates That There Is An Association Between INF And ROE. The Higher The
Inflation Rate In The Country By 1%, The Profitability In Banks In The Arab Republic Of Egypt Increases
By 0.38%. This Is Consistent With Some Of The Empirical Results That Have Been Shown.
The Below Table Refers To The Strong Correlation Between NIM And ROE. When NIM In The
Egyptian Banks Increases By 1%, The Banking Profitability Increases By 3.42%.
Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept) 5.7947 1.4540 3.985 0.000728 ***
nim 3.4277 0.5787 5.924 8.57e-06 ***
---
Signif. codes: 0 β***β 0.001 β**β 0.01 β*β 0.05 β.β 0.1 β β 1
*** shows correlation is significant at the 0.001 level.
Table (4) the estimated value for the influence of NIM on ROE
17. - 11 -
6 CONCLUSION
By Extracting The Data Available About Egypt From 1996 To 2017 And Using The Ordinary
Least Square (OLS) In The Sample. This Research Provides Empirical Evidence Of The Profitability
Determinants Of Banks In Egypt. Our Findings Show That The Profitability Is Significantly Determined
Internally By Its Net Interest Margin (NIM) And Externally By The Inflation Rate (INF). Those Variables
Have Positive Relationships With Egyptian Bank Profitability.
Implication of results on:
1) Policy Makers: More Care To Researches Of The Country's Economic Situation And Its Effective
Impact On Increasing And Growing Bank Profitability. Deciding The Net Interest Margin And Its
Significant Correlation With ROE.
2) Research: This Paper Gets A Scope About Analyzing And Measuring The Impact Of NIM & INF On
ROE In Egypt.
Limitations Of The Paper:
3) Insufficient Data Required To Measure Banks' Profitability, Its Relationship To Inflation, And The Net
Interest Margin. It Was Better To Have Another Measurement Of Data, Rather Than Numerical, Not
Percentage.
4) The Research Period Was Large And It Was Better To Divide The Period From 1996 To 2011 And
From 2011 To 2017 To Analyze The Period After The 2011 And 2013 Revolution.
5) Using One Technique For Analyzing The Data And One Indicator For Measuring The Banking
Profitability.
Further Research:
1) Testing New Variables And Another Period Particularly After 2011 To 2019.
2) It Is Recommended To Expand The Framework Of This Study Through The Addition Of Return On
Assets (ROA) And Return On Investments (ROI).
19. - 13 -
Sutanto, E. M., & Sudarsono, D. (2018). Empirical Analysis Of Firm Resources In The Banking Industry In
Indonesia: A Resource-Based View. International Journal Of Business And Society, 19(3), 587β595.
Abbas, A., & Arizah, A. (2019). Marketability, Profitability, And Profit-Loss Sharing: Evidence From
Sharia Banking In Indonesia. Asian Journal Of Accounting Research, 4(2), 315-326. Doi:
10.1108/Ajar-08-2019-0065
Sahyouni, A., & Wang, M. (2019). Liquidity Creation And Bank Performance: Evidence From Mena. Isra
International Journal Of Islamic Finance, 11(1), 27-45. Doi: 10.1108/Ijif-01-2018-0009
Musleh Alsartawi, A. (2019). Performance Of Islamic Banks. Isra International Journal Of Islamic Finance,
11(2), 303-321. Doi: 10.1108/Ijif-05-2018-0054
Ousama, A., Hammami, H., & Abdulkarim, M. (2019). The Association Between Intellectual Capital And
Financial Performance In The Islamic Banking Industry. International Journal Of Islamic And Middle
Eastern Finance And Management, Ahead-Of-Print(Ahead-Of-Print). Doi: 10.1108/Imefm-05-2016-
0073
Al-Harbi, A. (2019). The Determinants Of Conventional Banks Profitability In Developing And
Underdeveloped Oic Countries. Journal Of Economics, Finance And Administrative Science, 24(47),
4-28. Doi: 10.1108/Jefas-05-2018-0043
Islam, Z., Alam, B., & Hossain, M. (2019). Impact Of Credit Risk Management On Bank Performance:
Empirical Evidence From Bangladesh. South Asian Journal Of Management, 26(2), 1-34.
Ramesh, K. (2019). Determinants Of Bank Performance: Evidence From The Indian Commercial Banks.
Journal Of Commerce & Accounting Research, 8(2), 66β71.
Pradhan, R. S., & Radhe S. Pradhan, Yooba Raj Gautam, Y. R. (2019). Impact Of Liquidity Management On
Bank Profitability In Nepalese Commercial Banks. Srusti Management Review, Xii(I), 57β67.
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Doi: 10.22146/Jieb.17331
20. - 14 -
8 Appendices
Parameters Analysis
No. Independent Variables Author Date Sample Impact Evaluation
1 e-banking services
Husni Ali Khrawish,
Noor Mousa Al-
Sa'di
2011
Jordan (2000-
2009)
no impact
time period, data limited, one
country, therefore results of
empirical studies on Internet
banking may Be Changed If The
Researchers Used Different
Samples And Another Methods Of
Analysis
2 internet banking
Mingfeng Lin,
Henry C. Lucas,
Jr.,Joseph P. Bailey
2011 US (2003-2008) positive
data limited, time period, one
country, internet banking is new
and rapidly changing
3
1- size
2- capital
3- loans
4- deposits
5- GDP
6- inflation
7- market capitalization
Sehrish Gul, Faiza
Irshad, Khalid Zaman
2011
Pakistan (2005-
2009)
1- positive
2- negative
3- positive
4- positive
5- positive
6- positive
7- negative
limited period just for 4 years I agree
with the study
4 Electronic Banking
Zeph Chibueze
Abaenewe, Onyemachi
Maxwell Ogbulu,
Michael Osondu
Ndugbu
2013
Nigeria (1997-
2013)
positive
the time period was fair but it also for
one sample.
5
1- banksβ liquidity
2- size
3- capital strength
4- inflation
5- GDP
Nagaraju Thota 2013 India (1999-2011)
1- negative
2- negative
3- negative
4- positive
5- negative
I agree with the sample but the period
is limit
6
1- qualifieddirectors in the board,
directors with priorexperiencein
banking,chiefexecutive officer
compensationandexistence ofrisk
management committee in the board
2- ownership dispersion
3- frequency of boardmeeting
4- boardsize, femaledirector in the
board, andthe existence of audit
committee in the board
Olani Bekele Sakilu,
BerhanuGetinet Kibret
2015
Ethiopia (2008-
2013)
1- positive
2- negative
3- negative
4- no impact
the paper is fulled of independent
variables that have influence on the
financial performance
7
1- Capital Adequacy
Ratio (CAR)
2- Assets Quality (AQ)
3- Earnings Ability(EA)
4- Liquidity Ratio (LR).
Hameedah Sayani,
Pallavi Kishore, Vijaya
Kumar
2017 UAE (2008-2015)
1- positive
2- positive
3- insignificant
impact
4- insignificant
impact
rich of determinants
8
1- asset size
2- Net Interest Margin (NIM)
3- Asset Quality (NPL)
Asadul Islam, Nazirul
Islam Sarker, Mahabub
Rahman, Arifin
Sultana, Shafiullah
Prodhan
2017
Bangladesh (2014-
2015)
1- no impact
2- no impact
3- negative
the period was one year so it is very
limited
9
1- bank size
2- capital ratio
3- loan ratio
4- deposit ratio
5- loan loss provisions ratio
Nouran Mohamed
Kassem, Ahmed Sakr
2018 Egypt (2007-2016)
1- positive
2- negative
3- negative
4- negative
5- negative
the paper is very wealthy and it helps
me in the study
10
1- Internal (bank specific)
2- external (industry
specific andmacroeconomic)
Mohamed Galal
Abobakr
2018 Egypt (2006-2015)
1- Positive
2- negative
the paper is very wealthy and it helps
me in the study
11 Customer satisfaction
Yasser T. Halim,
Samia A. Hanna El
Sheikh
2018 Egypt positive
I agree with the researcherbut the data
was limitedfor one Conventional bank
and one islamic bank
21. - 15 -
12
1- capital adequacy ratio(CAR)
2- branch network
3- brandvalue
Eddy Madiono
Sutanto, David
Sudarsono
2018
Indonesia (2013-
2015)
1- negative
2- positive
3- positive
limited time of the paper
13 marketability
Ahmad Abbas, Ainun
Arizah
2019
Indonesia (2011β
2016)
positive limited data for just islamic banks
14 Liquidity creation
AhmadSahyouni, Man
Wang
2019
MENA (2011-
2016)
negative
different countries andlimitedtime for
the study
15
the composition
of the SharΔ«ΚΏah supervisory boards
(independence and frequency of
meetings)
AbdalmuttalebMusleh
Alsartawi
2019
GCC countries
(2013-2017)
negative
different countries andlimitedtime for
the study
16 intellectual capital
A.A. Ousama, Helmi
Hammami, Mustafa
Abdulkarim
2019
GCC countries
(2011-2013)
positive
different countries andlimitedtime for
the study
17
1- the bankingsector development
2- loans
3- deposits
4- GDP per capita
5- market capitalization
6- bank size
Ahmad Al-Harbi 2019
OIC countries
(1989-2008)
1- positive
2- positive
3- negative
4- no impact
5- no impact
6- no impact
wealthy variables and different
countries which was neededto be more
specific and more analyized
18
1- Capital
Adequacy Ratio (CAR)
2- Non-PerformingLoan Ratio(NPLR)
3- Loan toDeposit Ratio(LTDR)
4- Loan-Loss ProvisionRatio(LLPR)
Zahidul Islam, Badrul
Alam, Motaher
Hossain
2019
Bangladesh (2006-
2015)
1- positive
2- negative
3- positive
4- negative
the researchhave more variables and I
agree with it
19
1- Capital adequacy ratio (CAR)
2- Intermediationcost tototal assets
3- Nonperforming assets
4- Non-interest income
5- Net interest margin (NIM)
Kandela Ramesh 2019 India (2009-2017)
1- insignificant
impact
2- negative
3- negative
4- positive
5- positive
the researchhave more variables and I
agree with it
20
1- current ratio
2- liquid asset ratio
3- investment ratio
Radhe S. Pradhan,
Yooba Raj Gautam
2019 Nepal (2009-2015)
1- positive
2- negative
3- positive
I agree with the study
21
1- TA = Natural logof Total Assets
2- TCORCAP = Natural logof Total
Core Capital
3- CAR = Capital Adequacy Ratio
4- NPL = Non-PerformingLoan
5- LDR = Loan to Deposit Ratio
6- OE/OI = OperatingExpenses /
Operating
Income
7- NIM = Net Interest Margin
8- TMS= Natural logof Money
Supply
9- INF = Inflation
10- BIRATE= Bank IndonesiaInterest
Rate
R.A. Supriyono,
Heyvon Hekrdhayinta
2019
Indonesia (2011-
2015)
1- negative
2- negative
3- negative
4- negative
5- positive
6- negative
7- positive
8- negative
9- negative
10- negative
many parameters and the paper was
helpful to my research, limited time
and data
22. - 16 -
R Studio Script (1)
R version 3.6.2 (2019-12-12) -- "Dark and Stormy Night"
Copyright (C) 2019 The R Foundation for Statistical Computing
Platform: x86_64-w64-mingw32/x64 (64-bit)
R is free software and comes with ABSOLUTELY NO WARRANTY.
You are welcome to redistribute it under certain conditions.
Type 'license()' or 'licence()' for distribution details.
Natural language support but running in an English locale
R is a collaborative project with many contributors.
Type 'contributors()' for more information and
'citation()' on how to cite R or R packages in publications.
Type 'demo()' for some demos, 'help()' for on-line help, or
'help.start()' for an HTML browser interface to help.
Type 'q()' to quit R.
[Workspace loaded from C:/Users/thewo/Desktop/seminar/dubai/R project/fady/.RData]
> library(readxl)
> sem1 <- read_excel("C:/Users/thewo/Desktop/lolo/sem1.xls")
> View(sem1)
> library(ggplot2)
> ##Libraries##
> library(car)
Loading required package: carData
> ##Libraries##
> library(car)
> ##View Data##
> View(sem1)
> #Variable Names#
> str(sem1)
Classes βtbl_dfβ, βtblβ and 'data.frame': 22 obs. of 3 variables:
$ date: num 1996 1997 1998 1999 2000 ...
$ roe : num 13 13.8 14.3 14.9 12.9 ...
$ inf : num 7.19 4.63 3.87 3.08 2.68 ...
> ##Summary##
> summary(sem1)
date roe inf
Min. :1996 Min. : 7.248 Min. : 2.270
1st Qu.:2001 1st Qu.:10.307 1st Qu.: 4.537
Median :2006 Median :13.922 Median : 8.482
Mean :2006 Mean :13.716 Mean : 8.901
3rd Qu.:2012 3rd Qu.:15.077 3rd Qu.:11.039
Max. :2017 Max. :22.590 Max. :29.502
> ##Scatterplot##
> scatterplot(inf~date, data=sem1,col=4, pch=2)
> scatterplot(roe~date, data=sem1,col=4, pch=2)
> scatterplot(roe~inf, data=sem1,col=2, pch=5)
> ####Econometrics (Empirical Results)####
> ols<-lm(roe~inf, data=sem1)
> summary(ols)
Call:
lm(formula = roe ~ inf, data = sem1)
Residuals:
Min 1Q Median 3Q Max
-6.3163 -2.9967 0.2053 1.9020 7.4444
Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept) 10.2616 1.4038 7.310 4.56e-07 ***
inf 0.3881 0.1305 2.975 0.00749 **
---
Signif. codes: 0 β***β 0.001 β**β 0.01 β*β 0.05 β.β 0.1 β β 1
Residual standard error: 3.698 on 20 degrees of freedom
Multiple R-squared: 0.3067, Adjusted R-squared: 0.272
F-statistic: 8.848 on 1 and 20 DF, p-value: 0.007493
23. - 17 -
R Studio Script (2)
R version 3.6.2 (2019-12-12) -- "Dark and Stormy Night"
Copyright (C) 2019 The R Foundation for Statistical Computing
Platform: x86_64-w64-mingw32/x64 (64-bit)
R is free software and comes with ABSOLUTELY NO WARRANTY.
You are welcome to redistribute it under certain conditions.
Type 'license()' or 'licence()' for distribution details.
Natural language support but running in an English locale
R is a collaborative project with many contributors.
Type 'contributors()' for more information and
'citation()' on how to cite R or R packages in publications.
Type 'demo()' for some demos, 'help()' for on-line help, or
'help.start()' for an HTML browser interface to help.
Type 'q()' to quit R.
> library(readxl)
> sem2 <- read_excel("C:/Users/thewo/Desktop/sem2.xls")
> View(sem2)
> library(ggplot2)
> ##Libraries##
> library(car)
Loading required package: carData
> ##Libraries##
> library(car)
> ##View Data##
> View(sem2)
> #Variable Names#
> str(sem2)
Classes βtbl_dfβ, βtblβ and 'data.frame': 22 obs. of 3 variables:
$ date: num 1996 1997 1998 1999 2000 ...
$ roe : num 13 13.8 14.3 14.9 12.9 ...
$ nim : num 1.73 1.48 1.48 1.66 1.65 ...
> ##Summary##
> summary(sem2)
date roe nim
Min. :1996 Min. : 7.248 Min. :1.253
1st Qu.:2001 1st Qu.:10.307 1st Qu.:1.521
Median :2006 Median :13.922 Median :1.818
Mean :2006 Mean :13.716 Mean :2.311
3rd Qu.:2012 3rd Qu.:15.077 3rd Qu.:3.419
Max. :2017 Max. :22.590 Max. :4.133
> ##Scatterplot##
> scatterplot(nim~date, data=sem2,col=4, pch=2)
> scatterplot(roe~date, data=sem2,col=4, pch=2)
> scatterplot(roe~nim, data=sem2,col=2, pch=5)
> ####Econometrics (Empirical Results)####
> ols<-lm(roe~nim, data=sem2)
> summary(ols)
Call:
lm(formula = roe ~ nim, data = sem2)
Residuals:
Min 1Q Median 3Q Max
-3.6889 -2.8338 0.2073 2.2365 4.1729
Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept) 5.7947 1.4540 3.985 0.000728 ***
nim 3.4277 0.5787 5.924 8.57e-06 ***
---
Signif. codes: 0 β***β 0.001 β**β 0.01 β*β 0.05 β.β 0.1 β β 1
Residual standard error: 2.676 on 20 degrees of freedom
Multiple R-squared: 0.637, Adjusted R-squared: 0.6188
F-statistic: 35.09 on 1 and 20 DF, p-value: 8.569e-06
