Bank Profitability Case Study

1264 Words6 Pages
2.6 EXISTING EMPIRICAL RESULTS ON PROFITABILITY 2.6.1 Studies in the world on profitability A first study was conducted by Bourke in 1989 to assess the factors that influence the performance of commercial banks in Europe, North America, and Australia. His sample consisted of 90 banks and the study covered a period of ten years (1972-1981). Bourke concludes that the return on assets is influenced positively by the market structure, changes in equity and the bank's size. A methodology identical to that Bourke was used by Molyneux and Thornton (1992) to determine the profitability of European banks. The study focused on banks in 18 European countries for the period 1986-1989. The focus here is on the phenomenon of concentration that…show more content…
They consider two measures of bank profitability: return on assets and interest margins. They size up the banking profit through managerial variables, macro-financial and macroeconomic. Managerial variables (banking operating expenses, bank loans, the bank's size and equity) in their majority positively influence the profitability of banks. Unless the size of the bank that tends to dwindle bank profitability among the macro-financial variables, concentration, and financial market developments have a positive impact on the profitability of assets. Inflation and economic growth (macroeconomic variables) favor bank profitability. According to these authors, economic growth, increased profitability due to the increase in credit institutions of the appropriations itself has a positive influence on bank profits. This experience Moroccan bank generally describes the behavior of the banking systems of the Maghreb…show more content…
Nembot and Ningaye (2007) have captured the influence of financial reform on the profitability of the banking system in CEMAC countries. They consider one measure of bank profitability: return on assets. They use seven variables (the concentration index; the risk index, capital structure, capital management, the interest rate differential, the impairment of loans and a dummy variable). These two authors are in a static dimension of the reforms and lead to the following main results: the CEMAC banking concentration reduces the rate of return of assets where the encouragement of the process of competition that would then come back the trend. Other variables keep a positive character with the return on assets recorded despite the difference in the degree of

More about Bank Profitability Case Study

Open Document