Determinants of Banks Profitability in the Middle East and North Africa Region

• 발행기관: 한국유통과학회
• 저자명: Ammar JREISAT1, Hana BAWAZIR2
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 8 No.6, 701~711쪽, 전체 11쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2021.06.30

영문 초록

Bank profitability tends to go hand-in-hand with economic activity. Slower growth prospects may dent bank profitability through a reduction in the lending activity and a possible increase in credit impairments. This study identified the determinants of bank profitability for the Middle East and North Africa (MENA) region. Secondary data gathered from 10 countries, along with 927 observations spanning between 2008 and 2016, were analyzed in this study. The random-effect model was employed to assess the impact of several significant factors on bank profitability. As a result, non-interest income (NII) displayed a significantly positive impact on profitability. Essentially, increment in NII of banks (e.g., commission and credit card fee) positively affected the financial performance of banks and significantly contributed to the profitability of banks. Since economic growth had a positive impact on bank profitability, higher gross domestic product (GDP) led to higher profitability for banks across the MENA region. Nonetheless, a negative link was established between bank profitability and credit risk (non-performing loan or NLP). This signified that increment in NLP or low-quality loans adversely affected the financial performance of the banking segment. Hence, the banking sector in MENA should devise effective measures to increase NII earnings. More importantly, banks should be more risk-averse when providing loans to their clients.

목차

1. Introduction

2. Literature Review

3. Data and Methodology

4. Empirical Results

5. Conclusion

키워드

Profitability Credit Risk Inflation Banking Sector MENA Region