A Comparison of Key Determinants on Profitability of India’s Largest Public a...Rajveer Rawlin
The banking sector in India has come under the scanner following some key changes in monetary policy. With
the Reserve bank of India (RBI) raising interest rates to support the falling Indian currency the Rupee, the cost of
funds of banks has increased significantly. This could manifest itself in rising non-performing assets (NPAs) and
declining profitability. The profitability of banks is impacted by both internal and external factors. This paper is
an attempt to compare the key drivers of profits at India’s largest public and private sector banks. Bank specific
metrics and risk factors were important drivers of profits at both banks. Productivity measures were key drivers
of profits at India’s largest public sector bank SBI but had no effect on profits at India’s largest private sector
bank, HDFC bank. Asset usage efficiency measures were key determinants of profitability at HDFC bank but not
at SBI. The single most important determinant of SBI proved to be business per employee, a productivity
measure while advances and bank size which are traditional bank metrics were key drivers of profits at HDFC
bank. Managers at both banks and their share holders thus can look at these drivers to develop a broad
understanding of profitability at the two banks.
Determinants of Banks’ Financial Performance: A Comparative Study between Nat...inventionjournals
Financial performance is one of the most critical factors having impact on the decision making of the resource providers. And thus to ensure the existence in the ever growing competitive business environment, every institution should be more concerned about the factors affecting their financial performance. This paper specially focuses on identifying the factors having impact on the financial performance of the commercial banks operating in Bangladesh. An effort has also been exerted to determine whether the extent of influence of various factors on financial performance varies with respect to local private and nationalized commercial banks. For this purpose 10 local private commercial banks (PCB) and all nationalized commercial banks (NCB) have been taken covering the period from 2008-2014. Here, data has been collected from the annual reports of the banks under consideration. To draw conclusion a multiple regression has been run by considering financial performance (profitability) as dependent variable and operating efficiency, asset utilization , liquidity, credit risk, capital adequacy and size of the company as independent variables. The study finds that asset utilization and operating efficiency have significant positive impact on banks' financial performance (profitability) whereas credit risk has significant negative impact. However, for PCBs asset utilization is the most critical factor to performance. On the other hand, result shows that in case of NCB 1 taka increase in credit risk is responsible for negative return of 0.968 taka. It is found that financial performance has no significant relationship with size and liquidity of the banks
CREDIT QUALITY IN INDIAN BANKING :QUANTITATIVE EVALUATIONDinabandhu Bag
This document summarizes a study examining factors that influence credit quality and non-performing loans in Indian banking. The study finds:
1) Both economic factors and bank-specific factors like capital adequacy ratios and credit deposit ratios influence credit quality and non-performing assets.
2) Analyzing data from 2002-2007 for 17 major Indian banks, the study finds higher capital adequacy ratios and credit deposit ratios are associated with lower non-performing loans.
3) Stronger economic growth, as measured by GDP growth, is also associated with lower non-performing loans for banks. The results provide insights into how banks can maintain better credit quality.
Financial reporting quality has been said to play an important role in reducing information asymmetry. Thus, firms with high financial reporting quality may enhance more investors’ decision. Hence, the basic objective of this study is to determine whether earnings quality influence investors’ decision. The sample consisted of 10 manufacturing companies listed on the Nigerian Stock Exchange Market. The study period is 5 years (2010-2014). Data on accrual quality, volume of investment, Size, age and growth rate and earnings per share were drawn from the published annual report and accounts of the sampled companies. Correlation matrix, Vector auto regressive estimation and Pooled OLS model were employed for the analysis. Diagnostic tests for post estimation were also performed on the model. The result of the Ramsey Reset test shows a p-value of 0.2105, implying that model has no omitted variables. Also, Wooldridge test for autocorrelation in panel data indicates no first-order autocorrelation, showing a p-value of 0.3642. We calculated accruals quality based on the modified accrual model proposed by Mac Nichols in 2002. In this paper, the absolute value of residual error represents the financial reporting quality. This threshold is based on the idea that accruals reduce the smoothing initiated by the change in the cash flow and thus increase the earnings awareness. The study finds evidence of a positive association between investors’ decision and financial reporting quality.
This study employs the overall economic freedom index and the index’s components which are derived
from Heritage Foundation to examine their effects on Vietnamese commercial bank’s efficiency. In first step, we
obtain efficiency scores of 39 banks in Viet Nam using Data Envelopment Analysis (DEA), over the period
2010-2018 with 299 observations. Then second step, the efficiency scores estimated from DEA method will be
regressed on economic freedom indexes, applying truncated regression model combined with bootstrapped
confidence intervals while controlling for bank specific characteristics.
Mergers and acquisitions and bank performance in Europe the role of strategic...- -
This paper analyzes 262 mergers and acquisitions in the European banking sector between 1990-2004 to examine the impact of strategic similarities on bank performance. The authors find that mergers between banks with similar efficiency levels, capital structures, and business profiles led to improved post-merger performance, especially for domestic mergers focused on cost-cutting. However, differences in credit risk and activities boosted performance for cross-border mergers seeking revenue synergies. The analysis provides insights but has limitations such as a narrow time window, lack of controls for multiple mergers, and not accounting for differences in accounting standards across countries.
The aim of this paper is to examine the impact of bank minimum capital requirement on credit supply in Ivory Coast, over the period from 1982 to 2016. To this end, the ARDL method was used to study the nature of the relationship between our explanatory variables and bank credit supply in Ivory Coast. The study indicates some major results. The results showed that in the short term, real GDP per capita and bank size influence credit supply in Ivory Coast. Real GDP per capita acts negatively on credit supply in the short run while bank size has a positive influence on banks’ capacity to finance the economy. In the long run, the Cooke ratio and the openness rate have an impact on bank credit supply in Ivory Coast. The recovery of bank minimum capital requirements positively influences bank credit supply while the openness of the economy negatively impacts banks’ ability to offer bank credit. In terms of economic policies implications, monetary authorities must enforce and respect the policy of increasing bank minimum capital requirements. They must encourage banks to increase their banking assets.
Determinants of profitability of non bank financial institutionsGalibur Rahman
This document examines the determinants of profitability of Non-Bank Financial Institutions (NBFIs) in Bangladesh. It analyzes secondary data from 22 listed NBFIs using statistical techniques like correlation matrices and regression analysis. The study finds that liquidity, operating expenses, total assets, capital structure, and other factors significantly influence NBFI profitability. It highlights the need for strategic financial decisions by NBFIs in Bangladesh to gain competitive advantages in the changing global financial environment.
A Comparison of Key Determinants on Profitability of India’s Largest Public a...Rajveer Rawlin
The banking sector in India has come under the scanner following some key changes in monetary policy. With
the Reserve bank of India (RBI) raising interest rates to support the falling Indian currency the Rupee, the cost of
funds of banks has increased significantly. This could manifest itself in rising non-performing assets (NPAs) and
declining profitability. The profitability of banks is impacted by both internal and external factors. This paper is
an attempt to compare the key drivers of profits at India’s largest public and private sector banks. Bank specific
metrics and risk factors were important drivers of profits at both banks. Productivity measures were key drivers
of profits at India’s largest public sector bank SBI but had no effect on profits at India’s largest private sector
bank, HDFC bank. Asset usage efficiency measures were key determinants of profitability at HDFC bank but not
at SBI. The single most important determinant of SBI proved to be business per employee, a productivity
measure while advances and bank size which are traditional bank metrics were key drivers of profits at HDFC
bank. Managers at both banks and their share holders thus can look at these drivers to develop a broad
understanding of profitability at the two banks.
Determinants of Banks’ Financial Performance: A Comparative Study between Nat...inventionjournals
Financial performance is one of the most critical factors having impact on the decision making of the resource providers. And thus to ensure the existence in the ever growing competitive business environment, every institution should be more concerned about the factors affecting their financial performance. This paper specially focuses on identifying the factors having impact on the financial performance of the commercial banks operating in Bangladesh. An effort has also been exerted to determine whether the extent of influence of various factors on financial performance varies with respect to local private and nationalized commercial banks. For this purpose 10 local private commercial banks (PCB) and all nationalized commercial banks (NCB) have been taken covering the period from 2008-2014. Here, data has been collected from the annual reports of the banks under consideration. To draw conclusion a multiple regression has been run by considering financial performance (profitability) as dependent variable and operating efficiency, asset utilization , liquidity, credit risk, capital adequacy and size of the company as independent variables. The study finds that asset utilization and operating efficiency have significant positive impact on banks' financial performance (profitability) whereas credit risk has significant negative impact. However, for PCBs asset utilization is the most critical factor to performance. On the other hand, result shows that in case of NCB 1 taka increase in credit risk is responsible for negative return of 0.968 taka. It is found that financial performance has no significant relationship with size and liquidity of the banks
CREDIT QUALITY IN INDIAN BANKING :QUANTITATIVE EVALUATIONDinabandhu Bag
This document summarizes a study examining factors that influence credit quality and non-performing loans in Indian banking. The study finds:
1) Both economic factors and bank-specific factors like capital adequacy ratios and credit deposit ratios influence credit quality and non-performing assets.
2) Analyzing data from 2002-2007 for 17 major Indian banks, the study finds higher capital adequacy ratios and credit deposit ratios are associated with lower non-performing loans.
3) Stronger economic growth, as measured by GDP growth, is also associated with lower non-performing loans for banks. The results provide insights into how banks can maintain better credit quality.
Financial reporting quality has been said to play an important role in reducing information asymmetry. Thus, firms with high financial reporting quality may enhance more investors’ decision. Hence, the basic objective of this study is to determine whether earnings quality influence investors’ decision. The sample consisted of 10 manufacturing companies listed on the Nigerian Stock Exchange Market. The study period is 5 years (2010-2014). Data on accrual quality, volume of investment, Size, age and growth rate and earnings per share were drawn from the published annual report and accounts of the sampled companies. Correlation matrix, Vector auto regressive estimation and Pooled OLS model were employed for the analysis. Diagnostic tests for post estimation were also performed on the model. The result of the Ramsey Reset test shows a p-value of 0.2105, implying that model has no omitted variables. Also, Wooldridge test for autocorrelation in panel data indicates no first-order autocorrelation, showing a p-value of 0.3642. We calculated accruals quality based on the modified accrual model proposed by Mac Nichols in 2002. In this paper, the absolute value of residual error represents the financial reporting quality. This threshold is based on the idea that accruals reduce the smoothing initiated by the change in the cash flow and thus increase the earnings awareness. The study finds evidence of a positive association between investors’ decision and financial reporting quality.
This study employs the overall economic freedom index and the index’s components which are derived
from Heritage Foundation to examine their effects on Vietnamese commercial bank’s efficiency. In first step, we
obtain efficiency scores of 39 banks in Viet Nam using Data Envelopment Analysis (DEA), over the period
2010-2018 with 299 observations. Then second step, the efficiency scores estimated from DEA method will be
regressed on economic freedom indexes, applying truncated regression model combined with bootstrapped
confidence intervals while controlling for bank specific characteristics.
Mergers and acquisitions and bank performance in Europe the role of strategic...- -
This paper analyzes 262 mergers and acquisitions in the European banking sector between 1990-2004 to examine the impact of strategic similarities on bank performance. The authors find that mergers between banks with similar efficiency levels, capital structures, and business profiles led to improved post-merger performance, especially for domestic mergers focused on cost-cutting. However, differences in credit risk and activities boosted performance for cross-border mergers seeking revenue synergies. The analysis provides insights but has limitations such as a narrow time window, lack of controls for multiple mergers, and not accounting for differences in accounting standards across countries.
The aim of this paper is to examine the impact of bank minimum capital requirement on credit supply in Ivory Coast, over the period from 1982 to 2016. To this end, the ARDL method was used to study the nature of the relationship between our explanatory variables and bank credit supply in Ivory Coast. The study indicates some major results. The results showed that in the short term, real GDP per capita and bank size influence credit supply in Ivory Coast. Real GDP per capita acts negatively on credit supply in the short run while bank size has a positive influence on banks’ capacity to finance the economy. In the long run, the Cooke ratio and the openness rate have an impact on bank credit supply in Ivory Coast. The recovery of bank minimum capital requirements positively influences bank credit supply while the openness of the economy negatively impacts banks’ ability to offer bank credit. In terms of economic policies implications, monetary authorities must enforce and respect the policy of increasing bank minimum capital requirements. They must encourage banks to increase their banking assets.
Determinants of profitability of non bank financial institutionsGalibur Rahman
This document examines the determinants of profitability of Non-Bank Financial Institutions (NBFIs) in Bangladesh. It analyzes secondary data from 22 listed NBFIs using statistical techniques like correlation matrices and regression analysis. The study finds that liquidity, operating expenses, total assets, capital structure, and other factors significantly influence NBFI profitability. It highlights the need for strategic financial decisions by NBFIs in Bangladesh to gain competitive advantages in the changing global financial environment.
The impact of bank specific variables on the non performing loans ratio in th...Alexander Decker
This document analyzes factors that influence non-performing loan (NPL) ratios in the Albanian banking system. It discusses how NPL ratios have grown substantially since the 2008 financial crisis. The study aims to understand how bank-specific variables like capital adequacy, loan levels, loan-to-asset ratios, net interest margins, and returns on equity can explain NPL ratio levels. Regression analysis of quarterly data from 2002-2012 for Albanian banks will test relationships between NPL ratios and these independent variables.
Given the continued poor performance experienced in the banking sector as indicated by high levels of credit risk, poor quality loans and high incidence of non-performing loans, in spite of the frequent reforms that various governments in Nigeria have embarked upon, there is the need to constantly examine and analyse the factors that could affect bank performance with the aim of providing empirical evidence based on which solutions can be proffered. The paper examined the impact of asset quality management on the performance of deposit money banks in Nigeria. The paper adopted the ECM and co-integration techniques using annual aggregate data sourced from the CBN and the NDIC publications for the period 1990-2013. The findings of the study indicate that the selected measures of asset quality have significant impact on all the three indicators of bank performance namely- return on equity, return on total assets and return on shareholders’ fund respectively. In addition, the results of the impulse response and variance decomposition show that own shocks from the performance indicators ROE, ROTA and ROSF account for a greater proportion of the forecast errors of the variables within the ten-year forecast period. In the light of the above, it is recommended that deposit money banks in Nigeria should intensify their efforts in designing and implementing good asset quality management policies in order to further improve on their performance. This can be through human capacity building for personnel in the form of frequent professional training as well as strict adherence to the prudential guidelines.
This document summarizes a research paper that examines the determinants of profitability in Pakistan's insurance sector using a panel data set of 31 insurance firms from 2006 to 2011. It finds that leverage, size, earnings volatility and age of the firm are significant determinants of profitability, while growth opportunities and liquidity are not. This study contributes to the limited existing literature on determinants of profitability in Pakistan's insurance sector. It employs appropriate panel data techniques and controls to analyze how different firm-level factors influence profitability.
International Journal of Business and Management Invention (IJBMI)inventionjournals
This document summarizes a study that examined the determinants of credit risk in the Tunisian banking sector from 2003-2011. The study found that:
1) Performance, audit opinion, and audit quality were significant determinants of credit risk levels in banks, with higher performance, unqualified audit opinions, and audits by large accounting firms associated with lower credit risk.
2) Information quality, as proxied by discretionary accruals, was not found to be related to credit risk levels.
3) The study tested these relationships using an ordinary least squares regression model with credit risk as the dependent variable and information quality, performance, size, listing status, audit opinion, and audit quality as independent variables
IMPACT ON INDIAN BANKS’ PROFITABILITY INDICATORS – AN EMPIRICAL STUDYIAEME Publication
The Indian banking system consists of 26 public sector banks, 20 private sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural cooperative banks, in addition to cooperative credit institutions. The Indian banking sector’s assets reached US$ 1.8 trillion in FY14 from US$ 1.3 trillion in FY10, with 70 per cent of it being accounted by the public sector. Indian banks are increasingly focusing on adopting integrated approach to risk management. Banks have already embraced the international banking supervision accord of Basel II. According to RBI, majority of the banks already meet capital requirements of Basel III, which has a deadline of March 31, 2019. Most of the banks have put in place the framework for asset-liability match, credit and derivatives risk management.
DETERMINANTS OF BANK-SPECIFIC AND MACROECONOMIC FACTORS THAT ARE AFFECTING T...Uni-assignment
DETERMINANTS OF BANK-SPECIFIC AND MACROECONOMIC FACTORS THAT ARE AFFECTING THE PROFITABILITY OF COMMERCIAL BANKS A STUDY ON THE BRIC FROM THE EMERGING MARKET
Assessing The Adverse Effects Of Interbank Funds On Bank Efficiency Through U...ertekg
Download Link > https://ertekprojects.com/gurdal-ertek-publications/blog/assessing-the-adverse-effects-of-interbank-funds-on-bank-efficiency-through-using-semiparametric-and-nonparametric-methods/
This chapter investigates the relationship between interbank funds and efficiencies for the commercial banks operating in Turkey between 2001 and 2006. Data Envelopment Analysis (DEA) is executed to find the efficiency scores of the banks for each year, and fixed effects panel data regression is carried out, with the efficiency scores being the response variable. It is observed that interbank funds (ratio) has negative effects on bank efficiency, while bank capitalization and loan ratio have positive, and profitability has insignificant effects. This chapter serves as novel evidence that interbank funds can have adverse effects in an emerging market.
JEL Classification Codes: C14 (Semiparametric and Nonparametric Methods), C67 (Input–Output Models), G21 (Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages).
The aims of the paper are to study the financial performance between the independent finance companies and the
integrated finance companies over the period 2001-2011.
The Influencing Factors of Chinese Corporations’ LeverageIJAEMSJORNAL
This document analyzes the influencing factors of corporate debt leverage ratios in China using annual data from 2007 to 2018 for non-financial companies listed on China's A-share market. The empirical results find that:
1) Macroeconomic factors like GDP growth, money supply growth, and real interest rates have a significant impact on corporate debt leverage ratios.
2) Financial market factors such as the scale of social financing, financial institutions' leverage, and non-performing loan ratios also significantly impact corporate debt leverage ratios. Greater financial institution support for the real economy strengthens companies' ability to obtain debt financing.
3) Company-specific factors including profitability, size, growth, and liquidity significantly influence corporate debt
Proposal of the study THE IMPACT OF CORPORATE GOVERNANCE ON VOLUNTARY DISCLOS...Madiha kiran
This study examines the impact of corporate governance on voluntary disclosure among 10 commercial banks in Pakistan from 2011-2018. A regression analysis is used to analyze the relationship between various corporate governance factors and a voluntary disclosure index. The corporate governance factors tested as independent variables include board composition, board size, firm size, return on assets, block holders ownership, institutional ownership, audit committee size, foreign ownership, firm age, and leverage. The results could help determine whether stronger corporate governance leads to greater voluntary disclosure by commercial banks in Pakistan.
Financial instruments statistics important for central banks, and especially for the National Bank of Poland because if the statistical system imposes a responsibility on the central bank it must meet all the requirements of statistical excellence. This is a very important argument, but only a formal one for our interest in this subject. There is a second stream of motives for addressing this problem in central banks. Experience gained over the last decade shows clearly that financial instruments, especially those issued by enterprises, are becoming increasingly important for monetary transmission mechanisms and for financial stability. Among other things, there is empirical evidence that corporate bond spreads lead real economic activity. The situation in the financial instruments market is also meaningful for the general condition of the credit market, as bonds are close substitutes for banking credit. Development of the financial instruments market also contributes to the so-called financial market deepening effect, with multiple consequences for transmission mechanisms.7 It should be noted that, owing to the wide variety of channels through which financial instruments can interfere with monetary policy operations, the central banks are interested in collecting detailed information on these instruments. In practice it results in a complexity of standards for financial instruments security statistics that central banks are expected to meet.
The link between ownership structure, Loan to Deposit Ratio, Nonperforming Lo...inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Working capital management and cash holdings of banks in ghanaAlexander Decker
This document summarizes a study on the relationship between working capital management and cash holdings of banks in Ghana. The study analyzed panel data from 10 Ghanaian banks from 1999 to 2008. The results showed that longer debtor collection periods, longer cash conversion cycles, higher capital structure, and larger bank size were significantly negatively related to bank cash holdings. Meanwhile, longer creditor payment periods and higher profitability had a significantly positive relationship with bank cash holdings. The findings provide insights for bank managers and policymakers on how to effectively manage working capital to ensure adequate liquidity.
This document discusses a study examining the price effects of mergers and acquisitions in the Indian banking sector. The study estimates a fixed effects regression model using data from 1987 to 2015 to analyze how mergers affect deposit rates and interest rates offered by banks in both the short-run and long-run. The results show that in the short-run, mergers lead to insignificant decreases in deposit rates as banks do not gain much market power. However, in the long-run deposit rates of merged banks rise by up to 0.3 basis points as efficiency gains are realized. No significant or consistent effects on interest rates are found. The study concludes that efficiency gains dominate market power effects in the long-run, making mergers beneficial for consumers.
An assessment of factors affecting banks’ risk exposure in north central nigeriaAlexander Decker
The document summarizes a study that assessed factors affecting banks' risk exposure in North Central Nigeria. The study identified five main factors through factor analysis: liquidity and interest, domestic market, international market, business operation, and credit. It recommends that banks consider these factors in developing effective risk management strategies to reduce potential losses.
11.the impact of interest rate on profit among the united arab emirates uae s...Alexander Decker
The document summarizes a study that examined the impact of interest rates on the profits of small and medium enterprises (SMEs) in the United Arab Emirates (UAE). A questionnaire was administered to 20 employees of UAE SMEs to understand how interest rates affect company profits. The results showed that interest rates highly impact profits of SMEs in the UAE, with the highest mean scores relating to clear customer information about accounts and accurate advertising. The lowest mean scores related to avoiding increasing debt levels beyond repayment capacity and explicit credit approval policies. In conclusion, the study provides initial evidence that interest rates influence profits of SMEs in the UAE.
An analysis of the impact of mergers and acquisitions on commercial banks per...Alexander Decker
This document analyzes the impact of mergers and acquisitions on commercial banks in Nigeria. It discusses how the Central Bank of Nigeria introduced reforms in 2004 that required banks to increase their minimum capital to 25 billion naira by 2005. This led to over 80% of banks merging into 25 banks, while 14 banks that did not meet the requirement were liquidated. The document examines whether these mergers improved bank performance in terms of profitability, capitalization, and earnings per share. It also discusses the theoretical background and history of bank recapitalization in Nigeria.
An Impact of Capital Adequacy Ratio on the Profitability of Private Sector Ba...Dr. Amarjeet Singh
Profitability being one of the cardinal principles of bank lending acts as a game changer for the survival and success of private sector banks in India. In order to stay profitable, banks have to capitalise on every penny advanced to yield the expected returns. However, considering the constraints laid down by the Reserve Bank of India, banks have to maintain a minimum capital adequacy ratio, as per the current BASEL III regulations active in India. With the mergers of public sector banks, the challenge has got just tougher for the private sector banks in India. Expansion and Diversification are the key strategies adopted by the key players from the private banking sector, however, with the minimum capital adequacy ratio observed by them, it is necessary to understand its actual impact on the bank’s profitability. This research paper aims to throw light upon the linkage that capital adequacy has with the bank’s profitability. It attempts to establish a relation between the Capital Adequacy Ratio with the Net profits of the bank. For the purpose of this study, data from the past 5 years of the leading private sector banks has been collected, namely, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, AXIS Bank and YES Bank. The collected data has been analysed using Pearson’s Correlation to establish a relation between the CAR Ratio & the bank’s profitability. Hypothesis testing has been further done to study the quantum of proportionate change in the profitability with a change in the CAR Ratio for private sector banks using applicable research tools. The said research tools are applied to achieve the desired results while maintaining the required quantum of accuracy. It also aims to understand the proportionate impact of changes in CAR to the bank’s profitability, which can act as a suggested measure for banks to develop a reliable framework for efficient capital management and increase overall efficiency. The results derived from the data collected and analyzed aim to provide scope for further study on the subject matter.
This study aims to analyse the impact of external factors and internal factors on the risk factors of
regional development bank. Sample used in this study is regional development banks in Indonesia in the period
of 2015 – 2019.
Determinants of banks’ profitability in a developing economyAlexander Decker
This document investigates the factors that affect bank profitability in Tanzania. It uses a fixed effects regression model on panel data from 23 banks over the period of 2009 to 2013. The empirical results show that bank-specific factors, which are influenced by bank management decisions, significantly impact bank profitability in Tanzania. However, macroeconomic factors do not seem to significantly affect bank profitability. Therefore, bank profitability in Tanzania is mainly influenced by internal management decisions, while external macroeconomic conditions have an insignificant effect. The study aims to provide insight to policymakers and bank managers on how to improve long-term profitability.
11.parameters of conventional and islamic bank抯 profitability in pakistanAlexander Decker
This document summarizes a research study that analyzed the key determinants of profitability for conventional and Islamic banks in Pakistan from 2006-2010. The study used regression analysis to evaluate the relationship between various internal bank characteristics and profitability, as measured by return on assets. The results found that total assets had a negative relationship with profitability, suggesting larger banks may have lower efficiency. Total equity and deposits both had a positive relationship with profitability. The study concluded that major internal factors like assets, capital, loans, and deposits influence bank profitability in Pakistan.
11.[11 18]parameters of conventional and islamic bank抯 profitability in pa...Alexander Decker
This document summarizes a research study that analyzed the key determinants of profitability for conventional and Islamic banks in Pakistan from 2006-2010. The study used regression analysis to evaluate the relationship between various internal bank characteristics and profitability, as measured by return on assets. The results found that total assets had a negative relationship with profitability, suggesting larger banks may have lower efficiency. Total equity and deposits both had a positive relationship with profitability. The study concluded that major internal factors like assets, capital, loans, and deposits influence bank profitability in Pakistan.
The impact of bank specific variables on the non performing loans ratio in th...Alexander Decker
This document analyzes factors that influence non-performing loan (NPL) ratios in the Albanian banking system. It discusses how NPL ratios have grown substantially since the 2008 financial crisis. The study aims to understand how bank-specific variables like capital adequacy, loan levels, loan-to-asset ratios, net interest margins, and returns on equity can explain NPL ratio levels. Regression analysis of quarterly data from 2002-2012 for Albanian banks will test relationships between NPL ratios and these independent variables.
Given the continued poor performance experienced in the banking sector as indicated by high levels of credit risk, poor quality loans and high incidence of non-performing loans, in spite of the frequent reforms that various governments in Nigeria have embarked upon, there is the need to constantly examine and analyse the factors that could affect bank performance with the aim of providing empirical evidence based on which solutions can be proffered. The paper examined the impact of asset quality management on the performance of deposit money banks in Nigeria. The paper adopted the ECM and co-integration techniques using annual aggregate data sourced from the CBN and the NDIC publications for the period 1990-2013. The findings of the study indicate that the selected measures of asset quality have significant impact on all the three indicators of bank performance namely- return on equity, return on total assets and return on shareholders’ fund respectively. In addition, the results of the impulse response and variance decomposition show that own shocks from the performance indicators ROE, ROTA and ROSF account for a greater proportion of the forecast errors of the variables within the ten-year forecast period. In the light of the above, it is recommended that deposit money banks in Nigeria should intensify their efforts in designing and implementing good asset quality management policies in order to further improve on their performance. This can be through human capacity building for personnel in the form of frequent professional training as well as strict adherence to the prudential guidelines.
This document summarizes a research paper that examines the determinants of profitability in Pakistan's insurance sector using a panel data set of 31 insurance firms from 2006 to 2011. It finds that leverage, size, earnings volatility and age of the firm are significant determinants of profitability, while growth opportunities and liquidity are not. This study contributes to the limited existing literature on determinants of profitability in Pakistan's insurance sector. It employs appropriate panel data techniques and controls to analyze how different firm-level factors influence profitability.
International Journal of Business and Management Invention (IJBMI)inventionjournals
This document summarizes a study that examined the determinants of credit risk in the Tunisian banking sector from 2003-2011. The study found that:
1) Performance, audit opinion, and audit quality were significant determinants of credit risk levels in banks, with higher performance, unqualified audit opinions, and audits by large accounting firms associated with lower credit risk.
2) Information quality, as proxied by discretionary accruals, was not found to be related to credit risk levels.
3) The study tested these relationships using an ordinary least squares regression model with credit risk as the dependent variable and information quality, performance, size, listing status, audit opinion, and audit quality as independent variables
IMPACT ON INDIAN BANKS’ PROFITABILITY INDICATORS – AN EMPIRICAL STUDYIAEME Publication
The Indian banking system consists of 26 public sector banks, 20 private sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural cooperative banks, in addition to cooperative credit institutions. The Indian banking sector’s assets reached US$ 1.8 trillion in FY14 from US$ 1.3 trillion in FY10, with 70 per cent of it being accounted by the public sector. Indian banks are increasingly focusing on adopting integrated approach to risk management. Banks have already embraced the international banking supervision accord of Basel II. According to RBI, majority of the banks already meet capital requirements of Basel III, which has a deadline of March 31, 2019. Most of the banks have put in place the framework for asset-liability match, credit and derivatives risk management.
DETERMINANTS OF BANK-SPECIFIC AND MACROECONOMIC FACTORS THAT ARE AFFECTING T...Uni-assignment
DETERMINANTS OF BANK-SPECIFIC AND MACROECONOMIC FACTORS THAT ARE AFFECTING THE PROFITABILITY OF COMMERCIAL BANKS A STUDY ON THE BRIC FROM THE EMERGING MARKET
Assessing The Adverse Effects Of Interbank Funds On Bank Efficiency Through U...ertekg
Download Link > https://ertekprojects.com/gurdal-ertek-publications/blog/assessing-the-adverse-effects-of-interbank-funds-on-bank-efficiency-through-using-semiparametric-and-nonparametric-methods/
This chapter investigates the relationship between interbank funds and efficiencies for the commercial banks operating in Turkey between 2001 and 2006. Data Envelopment Analysis (DEA) is executed to find the efficiency scores of the banks for each year, and fixed effects panel data regression is carried out, with the efficiency scores being the response variable. It is observed that interbank funds (ratio) has negative effects on bank efficiency, while bank capitalization and loan ratio have positive, and profitability has insignificant effects. This chapter serves as novel evidence that interbank funds can have adverse effects in an emerging market.
JEL Classification Codes: C14 (Semiparametric and Nonparametric Methods), C67 (Input–Output Models), G21 (Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages).
The aims of the paper are to study the financial performance between the independent finance companies and the
integrated finance companies over the period 2001-2011.
The Influencing Factors of Chinese Corporations’ LeverageIJAEMSJORNAL
This document analyzes the influencing factors of corporate debt leverage ratios in China using annual data from 2007 to 2018 for non-financial companies listed on China's A-share market. The empirical results find that:
1) Macroeconomic factors like GDP growth, money supply growth, and real interest rates have a significant impact on corporate debt leverage ratios.
2) Financial market factors such as the scale of social financing, financial institutions' leverage, and non-performing loan ratios also significantly impact corporate debt leverage ratios. Greater financial institution support for the real economy strengthens companies' ability to obtain debt financing.
3) Company-specific factors including profitability, size, growth, and liquidity significantly influence corporate debt
Proposal of the study THE IMPACT OF CORPORATE GOVERNANCE ON VOLUNTARY DISCLOS...Madiha kiran
This study examines the impact of corporate governance on voluntary disclosure among 10 commercial banks in Pakistan from 2011-2018. A regression analysis is used to analyze the relationship between various corporate governance factors and a voluntary disclosure index. The corporate governance factors tested as independent variables include board composition, board size, firm size, return on assets, block holders ownership, institutional ownership, audit committee size, foreign ownership, firm age, and leverage. The results could help determine whether stronger corporate governance leads to greater voluntary disclosure by commercial banks in Pakistan.
Financial instruments statistics important for central banks, and especially for the National Bank of Poland because if the statistical system imposes a responsibility on the central bank it must meet all the requirements of statistical excellence. This is a very important argument, but only a formal one for our interest in this subject. There is a second stream of motives for addressing this problem in central banks. Experience gained over the last decade shows clearly that financial instruments, especially those issued by enterprises, are becoming increasingly important for monetary transmission mechanisms and for financial stability. Among other things, there is empirical evidence that corporate bond spreads lead real economic activity. The situation in the financial instruments market is also meaningful for the general condition of the credit market, as bonds are close substitutes for banking credit. Development of the financial instruments market also contributes to the so-called financial market deepening effect, with multiple consequences for transmission mechanisms.7 It should be noted that, owing to the wide variety of channels through which financial instruments can interfere with monetary policy operations, the central banks are interested in collecting detailed information on these instruments. In practice it results in a complexity of standards for financial instruments security statistics that central banks are expected to meet.
The link between ownership structure, Loan to Deposit Ratio, Nonperforming Lo...inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Working capital management and cash holdings of banks in ghanaAlexander Decker
This document summarizes a study on the relationship between working capital management and cash holdings of banks in Ghana. The study analyzed panel data from 10 Ghanaian banks from 1999 to 2008. The results showed that longer debtor collection periods, longer cash conversion cycles, higher capital structure, and larger bank size were significantly negatively related to bank cash holdings. Meanwhile, longer creditor payment periods and higher profitability had a significantly positive relationship with bank cash holdings. The findings provide insights for bank managers and policymakers on how to effectively manage working capital to ensure adequate liquidity.
This document discusses a study examining the price effects of mergers and acquisitions in the Indian banking sector. The study estimates a fixed effects regression model using data from 1987 to 2015 to analyze how mergers affect deposit rates and interest rates offered by banks in both the short-run and long-run. The results show that in the short-run, mergers lead to insignificant decreases in deposit rates as banks do not gain much market power. However, in the long-run deposit rates of merged banks rise by up to 0.3 basis points as efficiency gains are realized. No significant or consistent effects on interest rates are found. The study concludes that efficiency gains dominate market power effects in the long-run, making mergers beneficial for consumers.
An assessment of factors affecting banks’ risk exposure in north central nigeriaAlexander Decker
The document summarizes a study that assessed factors affecting banks' risk exposure in North Central Nigeria. The study identified five main factors through factor analysis: liquidity and interest, domestic market, international market, business operation, and credit. It recommends that banks consider these factors in developing effective risk management strategies to reduce potential losses.
11.the impact of interest rate on profit among the united arab emirates uae s...Alexander Decker
The document summarizes a study that examined the impact of interest rates on the profits of small and medium enterprises (SMEs) in the United Arab Emirates (UAE). A questionnaire was administered to 20 employees of UAE SMEs to understand how interest rates affect company profits. The results showed that interest rates highly impact profits of SMEs in the UAE, with the highest mean scores relating to clear customer information about accounts and accurate advertising. The lowest mean scores related to avoiding increasing debt levels beyond repayment capacity and explicit credit approval policies. In conclusion, the study provides initial evidence that interest rates influence profits of SMEs in the UAE.
An analysis of the impact of mergers and acquisitions on commercial banks per...Alexander Decker
This document analyzes the impact of mergers and acquisitions on commercial banks in Nigeria. It discusses how the Central Bank of Nigeria introduced reforms in 2004 that required banks to increase their minimum capital to 25 billion naira by 2005. This led to over 80% of banks merging into 25 banks, while 14 banks that did not meet the requirement were liquidated. The document examines whether these mergers improved bank performance in terms of profitability, capitalization, and earnings per share. It also discusses the theoretical background and history of bank recapitalization in Nigeria.
An Impact of Capital Adequacy Ratio on the Profitability of Private Sector Ba...Dr. Amarjeet Singh
Profitability being one of the cardinal principles of bank lending acts as a game changer for the survival and success of private sector banks in India. In order to stay profitable, banks have to capitalise on every penny advanced to yield the expected returns. However, considering the constraints laid down by the Reserve Bank of India, banks have to maintain a minimum capital adequacy ratio, as per the current BASEL III regulations active in India. With the mergers of public sector banks, the challenge has got just tougher for the private sector banks in India. Expansion and Diversification are the key strategies adopted by the key players from the private banking sector, however, with the minimum capital adequacy ratio observed by them, it is necessary to understand its actual impact on the bank’s profitability. This research paper aims to throw light upon the linkage that capital adequacy has with the bank’s profitability. It attempts to establish a relation between the Capital Adequacy Ratio with the Net profits of the bank. For the purpose of this study, data from the past 5 years of the leading private sector banks has been collected, namely, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, AXIS Bank and YES Bank. The collected data has been analysed using Pearson’s Correlation to establish a relation between the CAR Ratio & the bank’s profitability. Hypothesis testing has been further done to study the quantum of proportionate change in the profitability with a change in the CAR Ratio for private sector banks using applicable research tools. The said research tools are applied to achieve the desired results while maintaining the required quantum of accuracy. It also aims to understand the proportionate impact of changes in CAR to the bank’s profitability, which can act as a suggested measure for banks to develop a reliable framework for efficient capital management and increase overall efficiency. The results derived from the data collected and analyzed aim to provide scope for further study on the subject matter.
This study aims to analyse the impact of external factors and internal factors on the risk factors of
regional development bank. Sample used in this study is regional development banks in Indonesia in the period
of 2015 – 2019.
Determinants of banks’ profitability in a developing economyAlexander Decker
This document investigates the factors that affect bank profitability in Tanzania. It uses a fixed effects regression model on panel data from 23 banks over the period of 2009 to 2013. The empirical results show that bank-specific factors, which are influenced by bank management decisions, significantly impact bank profitability in Tanzania. However, macroeconomic factors do not seem to significantly affect bank profitability. Therefore, bank profitability in Tanzania is mainly influenced by internal management decisions, while external macroeconomic conditions have an insignificant effect. The study aims to provide insight to policymakers and bank managers on how to improve long-term profitability.
11.parameters of conventional and islamic bank抯 profitability in pakistanAlexander Decker
This document summarizes a research study that analyzed the key determinants of profitability for conventional and Islamic banks in Pakistan from 2006-2010. The study used regression analysis to evaluate the relationship between various internal bank characteristics and profitability, as measured by return on assets. The results found that total assets had a negative relationship with profitability, suggesting larger banks may have lower efficiency. Total equity and deposits both had a positive relationship with profitability. The study concluded that major internal factors like assets, capital, loans, and deposits influence bank profitability in Pakistan.
11.[11 18]parameters of conventional and islamic bank抯 profitability in pa...Alexander Decker
This document summarizes a research study that analyzed the key determinants of profitability for conventional and Islamic banks in Pakistan from 2006-2010. The study used regression analysis to evaluate the relationship between various internal bank characteristics and profitability, as measured by return on assets. The results found that total assets had a negative relationship with profitability, suggesting larger banks may have lower efficiency. Total equity and deposits both had a positive relationship with profitability. The study concluded that major internal factors like assets, capital, loans, and deposits influence bank profitability in Pakistan.
The profitability of commercial banks is influenced by a number of internal and external factors. This paper attempts to identify the internal factors which significantly influence the profitability of commercial banks in Bangladesh. In this study, profitability is measured by ROA and ROE which may be significantly influenced by the internal factors such as IRS, NIM, CAR, CR, DG, LD, CTI and SIZE of the bank. Data are collected from published annual reports during 2014--2018 of 23 commercial banks. Using simple regression model, it is found that CR has significant effect on the profitability and CAR has significant influence on ROA only. In addition to this, DG has significant effects on PCBs’ profitability (ROE only) where as IRS and CTI have significant influence on profitability (ROA only) of ICBs. Further, none of these variables have significant effects on the profitability of SCBs but CAR and CR are correlated with profitability (ROA only) and the causes may be the nature of services provided by SCBs to its clients. The internal policy makers should manage the influential internal factors of the banks in order to increase their profitability so that they can meet stakeholders’ expectations.
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability, including market power theory, efficiency structure theory, and the Modigliani-Miller theorem. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It found that liquidity has a statistically significant and positive relationship with bank profitability.
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It employed a descriptive research design using secondary data from the annual reports of 43 commercial banks over a 5-year period from 2009 to 2013. The findings showed that liquidity had a statistically significant positive relationship with bank profitability. The document provides context on theories of bank profitability and the motivation and methodology of the study.
Profitability determinants and the impact of global financial crisis a panel...Alexander Decker
This document summarizes a research study that examined the determinants of profitability for Islamic banks in Malaysia from 2007 to 2010 using panel data analysis. The study found that overhead expenses, loans, deposits, technical efficiency, and bank size had a positive significant effect on profitability, while inflation had a negative effect. Capital and reserves, liquidity, bank age, GDP growth, GDP per capita, and concentration ratio did not significantly impact profitability. The study also found that Islamic bank profitability was negatively affected by the 2008 global financial crisis.
Determinants of commercial banks profitability panel data evidence from pakistanAlexander Decker
This document summarizes a research study that investigated the determinants of commercial bank profitability in Pakistan from 2004-2010. The researchers used multiple regression analysis on a sample of 5 major commercial banks to determine the relationship between return on assets (the dependent variable) and various internal and external independent variables. The results indicated that internal factors like liquidity, efficiency, asset composition, deposit composition, and external factors like firm size had a significant impact on bank profitability. The study adds to the limited literature on factors influencing bank performance in Pakistan.
052 om c-dhanapal&gganesan-measuring_operational_efficiency_of (1) (1)Anil Aks
This document summarizes a study that measures the operational efficiency of public sector banks in India. It analyzes factors that influence banks' profitability using regression analysis. The study finds that non-performing assets, total income, total expenses, and net interest margin are significant factors. It also uses data envelopment analysis to benchmark the relative efficiency of 21 public sector banks over 5 years. The results show that return on assets, net interest margin, non-performing loans, cost-to-income ratio, advances to deposits ratio, and capital adequacy ratio influence banks' profitability.
A Dissertation Report On "Study Of Net Interest Margin {NIM} Of Selected INDIAN Public & Private Sector Banks"
Has Undertaken 10 Years Financial Data Of Selected Banks i.e. 2008-2017 for the Study.
DETERMINANTS OF BANK PROFITABILITY: EVIDENCE FROM COMMERCIAL BANKS OF BANGLADESHMd. Shohel Rana
This paper attempts to investigate the impact of different bank specific
and macroeconomic variables on bank profitability by considering 23
commercial banks of Bangladesh based on data availability during the
period 2013-17. These data are collected from the individual banks
annual reports, Bangladesh Bureau of Statistics (BBS) and a variety of
publications of the Bangladesh Bank. The fixed effect model for panel
data has been applied to operate the regression analysis among the
variables. In the study, three identical measures of profitability namely
Return on Asset (ROA), Return on Equity (ROE) and Net Interest
Margin (NIM) are used. In the model for ROA, the result indicated
that earning variable (TIN, NII), and asset structure (DPST) have a
significant positive relationship with ROA, and asset quality (NPL) has
significant negative impact on ROA. For ROE, earning (TIN and NII)
and capital strength (CAP) have a significant positive relationship of
the entire explanatory variable with ROE. Only asset quality (NPL)
has significant negative impact on ROE. For NIM, earning variables
(TIN), capital strength (CAP) and liquidity (LTA) have a significant
positive relationship with NIM. This study find no significant impact
of the macroeconomic factors namely growth rate of GDP and rate
inflation and rate of interest included in the models on profitability.
For decision making and developing the performance of financial
organization in the future the findings of this study can assist the
investors, policymakers, management body and other stakeholders
This document discusses a study analyzing the financial performance of selected private sector banks in Bangladesh in light of capital levels. The study examines the impact of factors like total capital/assets, risk-weighted assets, core capital/assets, equity capital/assets, and cost income ratio on the banks' returns on assets and equity. Annual data from 2008-2012 for three banks was used in multiple regression analysis. The study aims to determine if capital adequacy and cost income ratio influence bank profitability, and if Basel II requirements have been effective in reducing non-performing loans and bankruptcy risks in Bangladeshi banks. Previous literature suggests capital adequacy can impact lending, performance, and bankruptcy risk, but markets may better determine optimal capital levels.
Banks are directly affected by macroeconomic factors in China, with changes in these factors significantly impacting bank stock prices and the banks' operations and management. Due to differences in capital attributes, state-owned banks and non-stateowned banks exhibit various micro-level differences, leading to different reactions in their stock prices to macroeconomic changes. Consequently, the investment value analysis for banks with different attributes also differs. This paper conducts an empirical analysis of the investment value of bank stocks, primarily following these steps: first, conducting factor analysis on cross-sectional data to calculate the total variance explained by the factor analysis and the factor scores; second, calculating the common factors and composite scores for each quarter; and finally, using panel data and the improved TOPSIS-based factor analysis model to evaluate the stock investment value of 16 banks for the first, second, and third quarters of 2022. The results indicate a disparity in investment value between state-owned and non-state-owned banks, with an overall imbalance in investment value among these banks.
Review on Research paper 'Determinants of Financial Performance of Commercial...Saumya Singh
This study examined the determinants of financial performance of commercial banks in Kenya from 2001-2010. It found that bank-specific factors like capital adequacy, asset quality, and management efficiency significantly impacted performance measures like return on assets and equity. However, liquidity and macroeconomic variables did not have significant effects. Additionally, the study found that ownership structure (domestic vs. foreign banks) did not moderate financial performance. Thus, internal bank management decisions were more important determinants of performance than external macroeconomic conditions.
A Comparative Analysis of Capital Structure between Banking and Non-Banking F...iosrjce
This document analyzes the capital structure and performance of banking and non-banking financial institutions in Bangladesh from 2009-2013. It uses annual reports from 10 commercial banks and 10 non-bank financial institutions to measure capital structure using debt to equity and debt to assets ratios, and performance using return on equity, return on assets, and earnings per share. Descriptive statistics and t-tests are used to compare differences between the banking and non-banking sectors. The results show no significant difference in earnings per share, but significant differences in debt to assets ratio, debt to equity ratio, return on assets, and return on equity between banks and non-banks.
This document outlines a research proposal that examines the relationship between bank governance, financial disclosure, and bank sustainability in Ghana and South Africa. The proposal consists of 7 sections that describe the background and problem statement, objectives, research questions, methodology, significance, and limitations of the study. Specifically, the study aims to investigate how bank governance and financial disclosure relate to bank sustainability, as well as their interactive effects, using annual data from commercial banks in Ghana and South Africa from 2012 to 2022. The findings could provide insights for regulators, banks, and researchers regarding governance and transparency practices.
Financial Performance Analysis of Bank of Bhutan Limited using Regression Ana...ijtsrd
This study analyses the financial performance of the Bank of Bhutan Limited BOBL . To measure the performance of BOBL, the factors affecting the profitability of the bank have been analysed. The data for the study are collected from the published annual reports of BOBL for the period of 2009 2020. Regression analysis is used to evaluate the financial performance of the bank. Return on Investment ROI is used as a dependent variable, and Return on Assets ROA , Total Expense Ratio TER , Loans and Advances to Total Assets Ratio LTAR and Spread to Total Deposit Ratio STDR are used as independent variables. The findings of the study indicate that TER has a positive relationship with the profitability of BOBL whereas LTAR has a negative relation with BOBL’s profitability. Hence, it is concluded that among four independent variables, ROA and TER had significant impact on the profitability of BOBL. Dr. Aaditya Pradhan | Mr. Ugyen Thinlay "Financial Performance Analysis of Bank of Bhutan Limited using Regression Analysis" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-3 , June 2023, URL: https://www.ijtsrd.com.com/papers/ijtsrd58589.pdf Paper URL: https://www.ijtsrd.com.com/management/accounting-and-finance/58589/financial-performance-analysis-of-bank-of-bhutan-limited-using-regression-analysis/dr-aaditya-pradhan
A study on financial performance of vijaya bankDattu MudhiRaj
This document discusses analyzing the financial performance of Vijaya Bank through ratio analysis. It begins by defining financial analysis and its objectives. Ratio analysis is identified as a useful technique for evaluating various financial aspects of a company. The study focuses on analyzing Vijaya Bank's profitability, asset utilization, liquidity, and financial capabilities over three financial years using data collected from annual reports and the bank's website. The objectives are to evaluate Vijaya Bank's financial performance using ratio analysis and suggest improvements. Secondary research on previous bank performance studies is also reviewed.
This document summarizes a study on how the global financial crisis has impacted Bosnia and Herzegovina's financial stability and whether Islamic banking principles could help. The study used interviews and secondary data analysis to address 5 research questions. Results found that Bosnia's dependence on foreign banks, rising unemployment, and debt leave it vulnerable. The study concludes that incorporating aspects of Islamic banking like profit/loss sharing and linking finance to real economic activity could help reduce risk and stabilize Bosnia's financial system over time. More research is still needed to fully evaluate the impacts of applying Islamic financial principles in Bosnia.
This document contains details of a student project analyzing the financial statements of the top 3 Indian banks - SBI, ICICI, and PNB. It includes the student's name, roll number, project title, subject area, and guide's name. The project involves calculating and comparing various ratios such as profitability, leverage, payout, and liquidity ratios across the three banks. The objectives are to assess the banks' profitability, do comparative analysis between banks, and evaluate operational efficiency. The introduction provides background on banks' role in the economy. The literature review discusses previous research on analyzing banks' financial performance.
Similar to The Determinants of Profitability of Dutch Bangla Bank (20)
This presentation was provided by Racquel Jemison, Ph.D., Christina MacLaughlin, Ph.D., and Paulomi Majumder. Ph.D., all of the American Chemical Society, for the second session of NISO's 2024 Training Series "DEIA in the Scholarly Landscape." Session Two: 'Expanding Pathways to Publishing Careers,' was held June 13, 2024.
Chapter wise All Notes of First year Basic Civil Engineering.pptxDenish Jangid
Chapter wise All Notes of First year Basic Civil Engineering
Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
Linear Measurements: Instruments used. Linear Measurement by Tape, Ranging out Survey Lines and overcoming Obstructions; Measurements on sloping ground; Tape corrections, conventional symbols. Angular Measurements: Instruments used; Introduction to Compass Surveying, Bearings and Longitude & Latitude of a Line, Introduction to total station.
Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
Gender and Mental Health - Counselling and Family Therapy Applications and In...PsychoTech Services
A proprietary approach developed by bringing together the best of learning theories from Psychology, design principles from the world of visualization, and pedagogical methods from over a decade of training experience, that enables you to: Learn better, faster!
This document provides an overview of wound healing, its functions, stages, mechanisms, factors affecting it, and complications.
A wound is a break in the integrity of the skin or tissues, which may be associated with disruption of the structure and function.
Healing is the body’s response to injury in an attempt to restore normal structure and functions.
Healing can occur in two ways: Regeneration and Repair
There are 4 phases of wound healing: hemostasis, inflammation, proliferation, and remodeling. This document also describes the mechanism of wound healing. Factors that affect healing include infection, uncontrolled diabetes, poor nutrition, age, anemia, the presence of foreign bodies, etc.
Complications of wound healing like infection, hyperpigmentation of scar, contractures, and keloid formation.
LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UPRAHUL
This Dissertation explores the particular circumstances of Mirzapur, a region located in the
core of India. Mirzapur, with its varied terrains and abundant biodiversity, offers an optimal
environment for investigating the changes in vegetation cover dynamics. Our study utilizes
advanced technologies such as GIS (Geographic Information Systems) and Remote sensing to
analyze the transformations that have taken place over the course of a decade.
The complex relationship between human activities and the environment has been the focus
of extensive research and worry. As the global community grapples with swift urbanization,
population expansion, and economic progress, the effects on natural ecosystems are becoming
more evident. A crucial element of this impact is the alteration of vegetation cover, which plays a
significant role in maintaining the ecological equilibrium of our planet.Land serves as the foundation for all human activities and provides the necessary materials for
these activities. As the most crucial natural resource, its utilization by humans results in different
'Land uses,' which are determined by both human activities and the physical characteristics of the
land.
The utilization of land is impacted by human needs and environmental factors. In countries
like India, rapid population growth and the emphasis on extensive resource exploitation can lead
to significant land degradation, adversely affecting the region's land cover.
Therefore, human intervention has significantly influenced land use patterns over many
centuries, evolving its structure over time and space. In the present era, these changes have
accelerated due to factors such as agriculture and urbanization. Information regarding land use and
cover is essential for various planning and management tasks related to the Earth's surface,
providing crucial environmental data for scientific, resource management, policy purposes, and
diverse human activities.
Accurate understanding of land use and cover is imperative for the development planning
of any area. Consequently, a wide range of professionals, including earth system scientists, land
and water managers, and urban planners, are interested in obtaining data on land use and cover
changes, conversion trends, and other related patterns. The spatial dimensions of land use and
cover support policymakers and scientists in making well-informed decisions, as alterations in
these patterns indicate shifts in economic and social conditions. Monitoring such changes with the
help of Advanced technologies like Remote Sensing and Geographic Information Systems is
crucial for coordinated efforts across different administrative levels. Advanced technologies like
Remote Sensing and Geographic Information Systems
9
Changes in vegetation cover refer to variations in the distribution, composition, and overall
structure of plant communities across different temporal and spatial scales. These changes can
occur natural.
Level 3 NCEA - NZ: A Nation In the Making 1872 - 1900 SML.pptHenry Hollis
The History of NZ 1870-1900.
Making of a Nation.
From the NZ Wars to Liberals,
Richard Seddon, George Grey,
Social Laboratory, New Zealand,
Confiscations, Kotahitanga, Kingitanga, Parliament, Suffrage, Repudiation, Economic Change, Agriculture, Gold Mining, Timber, Flax, Sheep, Dairying,
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
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Training: ISO/IEC 27001 Information Security Management System - EN | PECB
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Philippine Edukasyong Pantahanan at Pangkabuhayan (EPP) CurriculumMJDuyan
(𝐓𝐋𝐄 𝟏𝟎𝟎) (𝐋𝐞𝐬𝐬𝐨𝐧 𝟏)-𝐏𝐫𝐞𝐥𝐢𝐦𝐬
𝐃𝐢𝐬𝐜𝐮𝐬𝐬 𝐭𝐡𝐞 𝐄𝐏𝐏 𝐂𝐮𝐫𝐫𝐢𝐜𝐮𝐥𝐮𝐦 𝐢𝐧 𝐭𝐡𝐞 𝐏𝐡𝐢𝐥𝐢𝐩𝐩𝐢𝐧𝐞𝐬:
- Understand the goals and objectives of the Edukasyong Pantahanan at Pangkabuhayan (EPP) curriculum, recognizing its importance in fostering practical life skills and values among students. Students will also be able to identify the key components and subjects covered, such as agriculture, home economics, industrial arts, and information and communication technology.
𝐄𝐱𝐩𝐥𝐚𝐢𝐧 𝐭𝐡𝐞 𝐍𝐚𝐭𝐮𝐫𝐞 𝐚𝐧𝐝 𝐒𝐜𝐨𝐩𝐞 𝐨𝐟 𝐚𝐧 𝐄𝐧𝐭𝐫𝐞𝐩𝐫𝐞𝐧𝐞𝐮𝐫:
-Define entrepreneurship, distinguishing it from general business activities by emphasizing its focus on innovation, risk-taking, and value creation. Students will describe the characteristics and traits of successful entrepreneurs, including their roles and responsibilities, and discuss the broader economic and social impacts of entrepreneurial activities on both local and global scales.
Temple of Asclepius in Thrace. Excavation resultsKrassimira Luka
The temple and the sanctuary around were dedicated to Asklepios Zmidrenus. This name has been known since 1875 when an inscription dedicated to him was discovered in Rome. The inscription is dated in 227 AD and was left by soldiers originating from the city of Philippopolis (modern Plovdiv).
The Determinants of Profitability of Dutch Bangla Bank
1. An Assignment
On
“The Determinants of Profitability of Dutch Bangla Bank Limited”
Course Name- E-Commerce & E-Banking
Course Code- FIN - 5208
Submitted To:
Md. Shahidullah Kayser
Lecturer,
Department of Finance
Jagannath University
Dhaka.
Date of Submission: August 27, 2017
Submitted By:
On behalf of Group No: 08
Sohel Rana
Id No: M150203039
Session: 2015-16
6th
Batch
Department Of Finance
Jagannath University,
Dhaka
2. GROUP NO-08
SL NO NAME ID NO
1 SOHEL RANA M150203039
2 RAKIBUL HAQUE M150203040
3 MD.KAMRUL HASAN M150203041
4 MD.ARMAN KHAN M150203042
5 MD. ALAMIN KHAN M150203043
3. Letter of Transmittal
August 27, 2017
To
Md. Shahidullah Kayser
Lecturer,
Department of Finance
Jagannath University, Dhaka.
Subject: Submission of an assignment on “The Determinants of Profitability of Dutch Bangla
Bank Limited.’’
Dear Sir,
This is our pleasure to present our assignment entitled on “The Determinants of
Profitability of Dutch Bangla Bank Limited.’’. We tried our level best to merge all the
necessary and current information gathered from sources and knowledge acquired during
making the assignment to represent this assignment as a unique outcome of our efforts firmly
believe that knowledge and experience we gathered during making the report will be helpful
in our future professional life.
We respectfully request you to accept this report for further Analysis. Your support in this
regard will be highly appreciated.
Thanking you,
Sincerely yours
-----------------------------
Sohel Rana
On behalf of Group No: 08
Id No: M150203039
Session: 2015-16
6th
Batch
Department Of Finance
Jagannath University, Dhaka
.
4. Abstract
A profitable banking sector is better able to withstand negative shocks and contribute to the
stability of the financial system. For resisting negative shocks and maintaining financial
stability, it is important to understand the determinants that mostly affect the profitability of
the banking sector of Bangladesh.The study identifies bank specific characteristics and
macroeconomic determinants of profitability in the Bangladesh’s banking sector over the
years 2010 to 2016. The study uses relevant data from the Annual Reports of Dutch Bangla
Bank Ltd (DBBL) and other macroeconomic data that influence the overall economic
performance. The bank specific determinants that are important in influencing profitability:
Return on Equity (ROE), Return on Assets (ROA) and Capital Adequacy Ratio (CAR),Bank
size, Liquidity ratio, Loan to deposit ratio. Besides, three macroeconomic determinants
significantly influence profitability including growth in GDP, inflation and Interest Rates.
Keywords: Determinants of Profitability of Banking Sector of Bangladesh,Bank specific
characteristics, Macroeconomic determinants, Dutch Bangla Bank Ltd (DBBL),
5. Introduction
The links between financial intermediation and economic growth focus on the key functions
of financial systems in the saving investment growth nexus. The efficiency of financial
intermediation affects country’s economic growth and, at the same time, the bank (financial
intermediation) insolvencies could result in systemic crises which have negative
consequences for the economy as a whole. The diversification and techniques of risk sharing
and pooling affect to the reduction of risks. The banking sector in Bangladesh is one of the
most important mechanisms of its financial system. In maintaining the stability of the
banking system its sustainable profitability is very important. The financial services include
short and long1term credit, mortgages, pensions, savings, payments, leasing and factoring.
All these services that are offered by the banking sector could reduce the incidence of poverty
in Bangladesh. The profitability of the banks could ensure the sustainability of economic
growth in this country.
This study has investigated the performance of the Dutch Bangla Bank Ltd. using the recent
financial data from 2010 to 2016. The period covered include a time of significant reforms in
the country’s banking sector. Since the National Commission of Money, Credit and Banking
recommendations (1986) for broad structural changes in Bangladesh’s financial
intermediation system, a series of actions was taken by the Bangladesh Bank to improve
performance of the banks. These measures included actions such as deregulate interest rates,
improve transparency, strengthening loan classification standards, improve transparency and
reducing Bangladesh Bank’s controlover financial transaction and loan recovery. All the
measures resulted in theimprovement in nonperforming loan ratios and significant rise in
interest related income for all Bangladeshis. Although a series of actions have been taken by
the Bangladesh Bank to improve the performance of the banking system, overall profitability
has remained unstable.
This study tries to examine the determinants that influence theprofitability of the Bangladeshi
banking sector. The bank efficiency or profitability could be influenced by the internal and
external determinants (Sufian and Chong 2008, Athanasoglou, Brissimis and Delis 2008).The
internal determinants focus on bank specific features and are mainly influenced by abank’s
management decisions and policy objectives. While the external determinants, the
macroeconomic characteristics, are not related to bank management but reflect the economic
and legal environment that affect the operation and performance of financial institutions. The
results of the study are likely to be useful to the concerned stakeholders such as
policymakers, investors and also to the banking itself.
.
6. Literature Review
Article Research Objective Main Findings
Molyneux and Seth (1998) Analyzed the performance of
foreign banks in
Australia over the period
1989 to 1993.
The main finding of this
study is that foreign banks
with a full Australian license
have a significantly lower
market share with a return on
asset (ROA) as dependent
variable. The coefficients that
are significantly positive
include a foreign banks’
home country GDP growth,
and the Australian net
interest margin and non-
interest income.
Demirguc-Kunt and Huizinga
(1999)
Used the bank level data for
the period of 1988 to 1995
for 80 countries to examine
how bank characteristics and
the overall banking
environment affect both
interest rate margins and
bank returns.
Results suggest that
macroeconomic and
regulatory conditions have a
significant impact on interest
rate margins and profitability.
Lower market concentration
ratios lead to lower margins
and profits, The foreign
banks have higher margins
and profits than domestic
banks in developing
countries, while the opposite
holds in developed countries.
Saunders and Schumacher
(2000)
Investigated the determinants
of interest margins in six
countries of the European
Union and the US during the
years 1988 to 1995.
They suggest that
macroeconomic volatility and
regulations have a significant
impact on bank interest rate
margins. Besides, the results
also find an important trade-
off between ensuring bank
solvency, as defined by high
capital to asset ratios, and
lowering the cost of financial
services to consumers, as
measured by low interest rate
margins.
7. Guru, Staunton and
Balashanmugam (2002)
Examined the determinants
of bank profitability in
Malaysia. The study used a
sample of 17 commercial
banks during the 1986 to
1995 period.
The determinants of the
profitability consist of
internal and external
determinants. Among the
macroeconomic (external
determinants) indicators,
high interest ratio was
associated with low bank
profitability and inflation was
found to have a positive
effect on bank performance.
Neceur (2003) Used a sample of 10
Tunisian banks from 1980 to
2000 and a panel linear
regression model to
determine the profitability of
bank.
Reported a strong positive
impact of Capitalization to
ROA.
Goddard et al. (2004) Supports the assumptions of
positive relationship between
capital/asset ratio and bank’s
earnings.
Capital adequacy refers to the
sufficiency of the amount of
equity to absorb any shocks
that the bank may
experience. Higher capital
reduces the risk of bank
failure.
Goddard, Molyneux and
Wilson (2004)
Examined the performance
of European banks across six
countries.
They reported a relatively
firm relationship between
size of bank and profitability
that measured by return on
equity (ROE).
Kosmidou (2008) Examined the determinants
of performance of Greek
banks during the years 1990
to 2002—the period of EU
financial integration.
The results suggested that the
high return on average assets
(ROA) was found to be
associated with well
capitalized banks and lower
cost to income ratios.
Sufian and Habibullah
(2009a)
Studied the determinants of
the Chinese bank
profitability.
They assert all the internal
and external variables have
statistically Significant
impact on Chinese banks’
profitability. Nevertheless,
the impacts are not uniform
across bank types.
8. Methodology
Data Collection
The required data for the analysis has been collected from the annual reports published during
the period 2010-2016. The data used for analysis are panel in nature. The data were selected
from the Annual Report of Dutch Bangla Bank Ltd. (DBBL) and from the website of
Bangladesh Bank. We have collected data regarding Dependent and Independent variables
from the above sources. The Dependent variable is the most accepted one the Return on
Equity (ROE) and the independent variables are Return on Assets (ROA), Capital Adequacy
Ratio (CAR), Bank Size, Liquidity Ratio, Loan Deposit Ratio, Non-Performing Loan to Total
Loan Ratio, GDP, Inflation Rate and Deposit Interest Rate. Here the Microeconomic
variables are Return on Equity (ROE) and the independent variables are Return on Assets
(ROA), Capital Adequacy Ratio (CAR), Bank Size, Liquidity Ratio, Loan Deposit Ratio, and
Non-Performing Loan to Total Loan Ratio and the Macroeconomic variables are GDP,
Inflation Rate and Deposit Interest Rate.
Research Method
The overall research is done by taking considerations of dependent and independent variables
which can also be further classified into Microeconomic and Macroeconomic variables.
Dependent Variable (Microeconomic Variable) -
Return on Equity (ROE)-Return on equity (ROE) is the amount of net income returned as a
percentage of shareholders equity.
ROE is expressed as a percentage and calculated as:
Return on Equity = Net Income/Shareholder's Equity
Independent Variables (Macroeconomic Variables) -
Return on Assets (ROA)-Return on assets (ROA) is an indicator of how profitable a
company is relative to its total assets.
The formula for return on assets is:ROA= Net Income/Total Assets
Capital Adequacy Ratio (CAR)-The capital adequacy ratio (CAR) is an international
standard that measures a bank’s risk of insolvency from excessive losses. Currently, the
minimum acceptable ratio is 8%. Maintaining an acceptable CAR protects bank depositors
and the financial system as a whole.
Expressed as a formula, the CAR equals the sum of the bank’s tier one capital plus tier two
capital, divided by its risk-weighted assets.
Bank Size-The log of the total assets of the bank is termed as the Bank size.
Liquidity Ratio-The ratio between the liquid assets and the liabilities of a bank or other institution.
9. Loan-to-Deposit Ratio-The loan-to-deposit ratio (LTD) is a commonly used statistic for
assessing a bank's liquidity by dividing the bank's total loans by its total deposits.
Nonperforming loan to loan ratio-A nonperforming loan (NPL) is the sum of borrowed
money upon which the debtor has not made his scheduled payments for at least 90 days.
Independent Variables (Macroeconomic Variables)
Gross domestic product (GDP)- is a monetary measure of the market value of all final
goods and services produced in a period (quarterly or yearly) or income.
Inflation Rate-Inflation is the rate at which the general level of prices for goods and services
is rising and, consequently, the purchasing power of currency is falling.
Deposit Interest Rate- The interest rate paid by financial institutions to deposit account
holders. Deposit accounts include certificates of deposit, savings accounts and self-directed
deposit retirement accounts.
Our collected data are presented below-
Microeconomic Variables of DBBL
YEAR ROE ROA CAR Bank Size Liquidity Ratio Loan Deposit Ratio NPLTL
2010 35.30% 2.20% 9.60% 11 66.87% 81.30% 2.40%
2011 27% 1.90% 11.80% 11.09 64.62% 79.10% 2.70%
2012 23.40% 1.70% 12% 11.19 58.78% 73.10% 3.00%
2013 17% 1.20% 13.70% 11.27 57.36% 73.30% 3.90%
2014 16.20% 1.10% 13.80% 11.33 57.61% 74.60% 4.40%
2015 19.30% 1.30% 13.70% 11.39 62.39% 81.50% 3.70%
2016 10.20% 0.70% 13.10% 11.44 62.64% 83.70% 5.20%
Source: Annual Reports of DBBL- 2010-2016
Macroeconomic Variables
YEAR GDP INFLATION Interets Rate
2010 5.57% 8.15% 7.14%
2011 6.46% 10.33% 10.02%
2012 6.52% 8.78% 11.69%
2013 6.01% 7.54% 11.19%
2014 6.06% 7.00% 9.08%
2015 6.55% 6.19% 8.20%
2016 7.05% 5.52% 6.20%
Source: Bangladesh Bank Website
We will exhibit here, how the dependent variable is influenced by independent variables
through various analyses and will also see the relation between the Microeconomic and
Macroeconomic variables.
10. Research Model
In this report we will perform six analyses to show how various determinants of profitability
works. Now we will give a breif overview of all the reseach models we have used in this task.
Descriptive statistics are used to describe the basic features of the data in a study. They
provide simple summaries about the sample and the measures. Together with simple graphics
analysis, they form the basis of virtually every quantitative analysis of data.
Normality tests are used to determine if a data set is well-modeled by a normal distribution
and to compute how likely it is for a random variable underlying the data set to be normally
distributed.
Stationary Test- In statistics, the Dickey–Fuller test tests the null hypothesis of whether a
unit root is present in an autoregressive model. The alternative hypothesis is different
depending on which version of the test is used, but is usually stationary or trend-stationary. It
is named after the statisticiansDavid Dickey and Wayne Fuller, who developed the test in
1979.
Regression analysis is a set of statistical processes for estimating the relationships among
variables. It includes many techniques for modeling and analyzing several variables, when
the focus is on the relationship between a dependent variable and one or more independent
variables (or 'predictors'). More specifically, regression analysis helps one understand how
the typical value of the dependent variable (or 'criterion variable') changes when any one of
the independent variables is varied, while the other independent variables are held fixed.
Multicollinearity (also co linearity) is a phenomenon in which one predictor variables in a
multiple regression model can be linearly predicted from the others with a substantial degree
of accuracy. In this situation the coefficient estimates of the multiple regressions may change
erratically in response to small changes in the model or the data.
Autocorrelation, also known as serial correlation, is the correlation of a signal with a
delayed copy of itself as a function of delay. Informally, it is the similarity between
observations as a function of the time lag between them. The analysis of autocorrelation is a
mathematical tool for finding repeating patterns, such as the presence of a periodic signal
obscured by noise, or identifying the missing fundamental frequency in a signal implied by
its harmonic frequencies.
The collected data will be used in these models to determine the profitability of the Bank and
how well it is interrelated with the macroeconomic factors.
11. 1. Descriptive Statistics
This section includes the descriptive statistics of the model variables, estimated results of the
model mentioned in the methodology and therobustness test of the model. To identify the
internal factors that contribute tothe profitability of the bank, a balanced panel data has been
used.In the model all the variables are tested for each cross section and each time period. The
descriptive statistics is presented in the table below-
ROE ROA CAR Bank
Size
Liquidit
y Ratio
Loan
to
Deposi
t Ratio
NPLT
L
GDP Inflatio
n
Interest
Rate
(Deposit
)
Mean 0.21
2
0.01
4
0.12
3
11.2
4
0.614 0.7809 0.036 0.06
3
0.076 0.091
Median 0.19
3
0.01
3
0.13
1
11.2
7
0.623 0.791 0.037 0.06
4
0.075 0.091
Std.
Deviation
0.08
3
0.00
5
.015 0.16
1
0.036 0.0437 0.009 0.00
4
0.016 0.020
Skewness 0.62
0
0.13
4
-1.31 -0.41 0.216 -0.069 0.408 -0.09 0.438 -0.09
Kurtosis 0.37
7
-0.8 1.42 -1.07 -1.46 -2.16 -0.72 0.12
3
-0.11 -1.35
Observation
s
7 7 7 7 7 7 7 7 7 7
Table- Descriptive Statistics of the major variables
Table shows the general characteristics of thedata. If we observe the descriptive statistics we
can see that the central (meanand median) values are very near to each other. The minimum
variation is found in case of ROA which indicates that the ratio remains stable across time
periods for the bank. Other variables variation are also very little which is a good sign for the
bank.
2. Regression Analysis
In order to perform Regression analysis, we need to assign dependent and independent
variables. For the purpose of the study we will take Return on Equity as Dependent variable
and GDP, Inflation Rate and Deposit interest rate as Independent variables. We can find out
how the rate of equity changes due to the changes in these macroeconomic factors.
Dependent Variable- Return On Equity (ROE)
Independent Variables- GDP, Inflation Rate, Interest Rate (Deposit)
12. Result of Regression Analysis
SUMMARY
OUTPUT
Regression Statistics
Multiple R 0.90412
R Square 0.817433
Adjusted R
Square
0.634867
Standard Error 0.049617
Observations 7
ANOVA
df SS MS F Significance
F
Regression 3 0.033068 0.011023 4.477449 0.124920347
Residual 3 0.007386 0.002462
Total 6 0.040454
Coefficients Standard
Error
t Stat P-value Lower 95% Upper
95%
Intercept 0.559717 0.329169 1.700393 0.187616 -
0.48784611
1.607279
GDP -7.82556 4.467959 -1.75148 0.178159 -
22.0445948
6.393484
INFLATION 4.134524 1.609524 2.568787 0.08258 -
0.98769976
9.256748
Interest Rate -1.86703 1.228894 -1.51928 0.226007 -
5.77792288
2.043858
Table- Regression Analysis of the dependent and independent variables
The fitted line is reasonably good. The goodness of fit, R2
shows that the independent
variables explain about 81.75% of the variations in the dependent variable. The value of
adjusted R2
is 0.6348 which states that 63.48% variation in ROE is explained by variations in
independent variables. The value of F statistics is 4.47 and it’s -value shows the overall
significance or explanatory power or the fitness of the model. The coefficient of the Inflation
is 4.134524, implying that a one percent increase in total Inflationincreases the Rate of Equity
by 4.13 percent. On the other hand a one percent increase in Deposit Interest Rate will
decrease the rate of equity by 1.86 percent.Again a one percent increase in GDP will decrease
Rate of Equity by 7.83 percent, if all other variables remaining constant. So, the estimated
regression equation is produced below-
In ROE= 0.559717-7.82556GDP+4.134524Inflation-1.86703Interest Rate.
13. 3. Unit Root Test (Stationarity Test)
We use Augmented Dickey-Fuller (DF) test to operate the unit root test. We consider
following equation;
ΔYt = β1+β2t+Yt-1+Ut
Where, t is trend variable in each case, both hypothesis is that,
H0: = 0 [Time series is non-stationary]
Ha: < 0 [Time series is stationary]
If the null hypothesis is rejected, it means that Yt is a stationary time series. If The computed
value is less than even the 10 percent critical value in absolute terms then null hypothesis is
accepted and conclusion is that the time series is non-stationary. The unit root test results are
shown in Table 1.
VARIABLE NULL
HYPOTHESIS
TEST
STATISTIC
ASY.
CRITICAL
VALUE
10%
DECESION PROBABILITY
ROE
A (1) =0, T-
TEST
-3.593236 -2.593 H0 rejected .4175
ROA
A (1) =0, T-
TEST
-6.9969 -2.593 H0 rejected
CAR
A (1) =0, T-
TEST
-3.372883 -2.593 H0 rejected .587
Bank Size
A (1) =0, T-
TEST
-4.690971 -2.593 H0 rejected .0208
Liquidity Ratio
A (1) =0, T-
TEST
-3.367925 -2.593 H0 rejected .682
Loan Deposit
Ratio
A (1) =0, T-
TEST
-2.054641 -2.593 H0 rejected .2619
NPLTL
A (1) =0, T-
TEST
-1.663665 -2.593 H0 accepted .7638
GDP
A (1) =0, T-
TEST
-3.016418 -2.593 H0 rejected .6518
INFLATION
A (1) =0, T-
TEST
-3.417740 -2.593 H0 rejected .8425
DEPOSIT
INTEREST
RATE
A (1) =0, T-
TEST
-5.669889 -2.593 H0 rejected .7620
Here dependent variable ROA and other independent variables such as ROE, ROA, CAR,
BANK SIZE, LIQUIDITY RATIO, LOAN DEPOSIT, GDP, INFLATION, DEPOSIT
INTEREST RATE all are individually H0 rejected that is they are stationary and does not
contain a unit root. Here the only non-stationary variable is NPLTL. So, the regression of a
stationary time series on other non-stationary time series will not produce a spurious
regression.
14. 4. Normality Test
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent
ROE 7 100.0% 0 .0% 7 100.0%
CAR 7 100.0% 0 .0% 7 100.0%
SIZE 7 100.0% 0 .0% 7 100.0%
LIQUIDITY 7 100.0% 0 .0% 7 100.0%
LOANDEPOSITS 7 100.0% 0 .0% 7 100.0%
NPLTL 7 100.0% 0 .0% 7 100.0%
GDP 7 100.0% 0 .0% 7 100.0%
INFLATION 7 100.0% 0 .0% 7 100.0%
DEPOSITINTEREST 7 100.0% 0 .0% 7 100.0%
ROA 7 100.0% 0 .0% 7 100.0%
Tests of Normality
Kolmogorov-Smirnova
Shapiro-Wilk
Statistic df Sig. Statistic df Sig.
ROE .163 7 .200*
.971 7 .903
CAR .217 7 .200*
.837 7 .094
SIZE .135 7 .200*
.962 7 .834
LIQUIDITY .197 7 .200*
.920 7 .466
LOANDEPOSITS .216 7 .200*
.880 7 .226
NPLTL .161 7 .200*
.964 7 .854
GDP .189 7 .200*
.965 7 .864
INFLATION .101 7 .200*
.984 7 .976
DEPOSITINTEREST .136 7 .200*
.963 7 .845
ROA .180 7 .200*
.975 7 .930
a. Lilliefors Significance Correction
*. This is a lower bound of the true significance.
Here we see in the first table the case processing summery of the variables for the normality
test. The table shows that there is no missing variable in the test and all the variable are Valid
at 100%
15. In the second table, we see the normality test of all variables. We take 5% level of
significance and take null hypothesis is that the variables are not normally distributed and
take alternative hypothesis that the variables are normally distributed. Here we use KS test
and SW test for normality test. If the value of Significance is less than .05 then we infer that
the null hypothesis accepted and conclude that the variable is not normally distributed. But if
the significance value is greater than .05 then we reject null hypothesis and accept alternative
hypothesis and conclude that the variable is normally distributed. First, we see the KS test.
Here the sig. of ROE is .20 which is greater than .05. so, we can say that the variable ROE is
normally distributed. In the same we see the significance of all the variable is .20 which is
greater than .05. so, we conclude that all the variables are normally distributed according KS
test. Now we see the SW test. Here we see the sig. of ROE is .903 which is greater than .05.
so, we can say that ROE is normally distributed. In the same way, the sig. of the all variables
are greater than .05. so, we can say that all the variables are normally distributed. The result
of SW TEST is more valid than KS TEST.
5. Auto Correlation Analysis
Auto Correlation Matrix
ROE NPLTL LR LDR INFLA GDP CAR DIR BS
ROE 1.00 0.95 0.61 0.04 0.69 0.64 0.88 0.08 0.94
NPLTL 0.95 1.00 0.46 0.13 0.81 0.54 0.76 0.34 0.91
LR 0.61 0.46 1.00 0.80 0.20 0.08 0.73 0.61 0.49
LDR 0.04 0.13 0.80 1.00 0.36 0.32 0.26 0.89 0.12
INFLA 0.69 0.81 0.20 0.36 1.00 0.31 0.53 0.59 0.82
GDP 0.64 0.54 0.08 0.32 0.31 1.00 0.45 0.15 0.65
CAR 0.88 0.76 0.73 0.26 0.53 0.45 1.00 0.18 0.87
DIR 0.08 0.34 0.61 0.89 0.59 0.15 0.18 1.00 0.23
BS 0.94 0.91 0.49 0.12 0.82 0.65 0.87 0.23 1.00
Here we can see that ROE is strongly negatively related with Non-Performing Loan to Total
Loan. It means that if Non-Performing Loan increase, the return of DBBL will decrease. The
relationship between ROE to Liquidity Ratio is 0.61. It means that liquidity ratio affects the
ROE. If liquidity ratio changes, ROE will positively change. LDR means loan to deposit ratio
and it is poorly related with ROE (0.04). It can affect ROE so much. Here ROE vs Inflation
0.69. It means inflation positively affects ROE. ROE vs GDP is (0.64), it expresses that if
GDP Increase, the return will decrease. The CAR vs ROE is opposite relation. DIR or
Deposit Interest Ratio is 0.04 and means it is poorly related. IF BS or Bank Size increases, it
will decrease return. Because it strong negatively related.
16. Autocorrelation
Autocorrelation can also be referred to as lagged correlation or serial correlation, as it
measures the relationship between a variable's current value and its past values. When
computing autocorrelation, the resulting output can range from 1 to negative 1 in line with the
traditional correlation statistic. An autocorrelation of 1 represents a perfect positive
correlation. I have used Microsoft Excel and the help of YouTube to measure the auto
correlation.
Auto Co-relation
for
Rxy(
0)
for
Rxy(1)
for
Rxy(
2)
For
Rxy(
3)
for
Rxy(
4)
for
Rxy(
5)
for
Rxy(
6)
for
Rxy(-
1)
for
Rxy(-
2)
For
Rxy(-
3)
for
Rxy(-
4)
for
Rxy(-
5)
for
Rxy(-
6)
12.4
6% 0.00%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
9.53
%
8.26
%
6.00
%
5.72
%
6.81
%
3.60
%
7.29
% 9.53%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
6.32
%
4.59
%
4.37
%
5.21
%
2.75
%
0.00
%
5.48
% 6.32%
8.26
%
0.00
%
0.00
%
0.00
%
0.00
%
3.98
%
3.79
%
4.52
%
2.39
%
0.00
%
0.00
%
2.89
% 3.98%
4.59
%
6.00
%
0.00
%
0.00
%
0.00
%
2.75
%
3.28
%
1.73
%
0.00
%
0.00
%
0.00
%
2.62
% 2.75%
3.79
%
4.37
%
5.72
%
0.00
%
0.00
%
3.13
%
1.65
%
0.00
%
0.00
%
0.00
%
0.00
%
3.72
% 3.13%
3.28
%
4.52
%
5.21
%
6.81
%
0.00
%
1.97
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
1.04
% 1.97%
1.65
%
1.73
%
2.39
%
2.75
%
3.60
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
35.5
1%
27.68
%
21.5
7%
16.6
3%
13.3
2%
9.57
%
3.60
%
27.68
%
21.57
%
16.63
%
13.32
%
9.57
%
3.60
%
Sum of
Data 1.181
Square
Root 1.087
Auto
Corelatio
n 0.087
If the returns do exhibit autocorrelation, the stock could be characterized as a momentum
stock; its past ROE seem to influence its future returns. The investor runs a regression with
two prior trading sessions' returns as the independent variables and the current return as the
17. dependent variable. We found that returns positive autocorrelation of 0.87, while past returns
seem to influence future returns, and she/he can adjust her/his portfolio to take advantage of
the autocorrelation and resulting momentum.
6. Multicollinearity
To analyze the Multicollinearity, I have used SPSS statistics tool, and doing so I have
gathered some knowledge on it.
Coefficientsa
Model
Collinearity Statistics
Tolerance VIF
1 CAR .027 36.556
Liquidity .017 58.600
NPLTL .026 39.111
GDP .071 14.114
Inflation .010 101.610
INT .006 168.000
a. Dependent Variable: ROE
Collinearity Diagnosticsa
Model Dimension Eigenvalue
Condition
Index
Variance Proportions
(Constant) CAR
Liqu
idity NPLTL GDP Infl. INT
1 1 6.858 1.000 .00 .00 .00 .00 .00 .00 .00
2 .097 8.397 .00 .00 .00 .01 .00 .00 .00
3 .033 14.410 .00 .00 .00 .00 .00 .00 .00
4 .007 31.410 .00 .00 .00 .04 .02 .02 .00
5 .004 41.694 .00 .04 .00 .04 .03 .00 .00
6 .000 148.954 .27 .26 .00 .08 .10 .05 .03
7 .000 488.558 .73 .70 1.00 .83 .85 .92 .97
Dependent Variable: ROE
Here in first table titled “Coefficientsa” we have VIF in the last column. It shows we have
Multicollinearity issues in all case. The moderate Multicollinearity issue is above 5 and
below 10 and in Liquidity and as all variable CAR, Liquidity, NPLTL GDP, Inflation and
INT, we have absolute Multicollinearity issue as they are above 10. To analyze this, I have
chosen the CAR, Liquidity Ratio, NPLTL, GDP, Inflation Loan Deposit, Interest Rate and as
independent variables and ROE as dependent variable.
18. Conclusion
The study was carried out with the main purpose of identifying the potential bank specific
and macroeconomic determinants of bank profitability in Bangladesh banking sector. To
recap, there are few literatures that examined the profitability of the bank in the developing
countries compared to the studies that were conducted in the context of developed countries.
This study examined the performance of a Bangladeshi commercial bank (Dutch Bangla
Bank Ltd) during the period 2010 to 2016.
The bank specific determinants that were examined consist of Return on Equity (ROE),
Return on Assets (ROA) and Capital Adequacy Ratio (CAR), Bank size, Liquidity ratio,
Loan to deposit ratio, NPLTL. Besides, three macroeconomic determinants significantly
influence profitability including growth in GDP, inflation and Interest Rates. To identify the
significant relationship between profitability and those potential determinants, the study used
the Multiple Regression Analysis (MRA. The study found that all bank specific determinants
influenced the profitability of the Bangladeshi banking sector. The empirical findings of this
study suggest that bank specific characteristics such as Capital Adequacy Ratio (CAR),
Liquidity ratio, Loan to deposit ratio have positive and significant impacts on bank
performance, while non-traditional activities exhibit negative relationship with bank
profitability. The empirical findings suggest that non-traditional activities and liquidity have a
mix (positive and negative) impact on bank profitability. As for the impact of macroeconomic
indicators, GDP and market deposit rates have positive and significant impacts on bank
performance. On the other hand, inflation shows negative relationship with the profitability of
the Bangladeshi banking sector.
The findings of this study offer considerable policy relevance. It could be argued that the
more profitable banks will be able to produce more products and services and directly
improve the economy of the country. In addition, to ensure the competitiveness of the
Bangladeshi banking sector, the capability to maximize risk adjusted returns on investment
and sustaining stable and competitive returns represent a significant element. Thus, from the
regulatory perspective, the performance of the banks should be considered based on their
efficiency and profitability.
Moreover, in view of the increasing competition attributed to the more liberalized banking
sector, bank management as well as the policymakers will be more inclined to identify the
effective and efficient ways to obtain the optimal utilization of capacities. Therefore, the
resources will be fully utilized and eliminate the wastage during the production of banking
products and services.
19. Reference
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