The Effects of Selected Determinants on The Performance of Banks: Evidence from Developed Market Economies from 1984 to 2018

Taban Pasha

doi:10.25212/lfu.qzj.8.2.44

Authors

Taban Pasha Ministry of higher education and scientific research – Financial Control Directorate

DOI:

https://doi.org/10.25212/lfu.qzj.8.2.44

Keywords:

Banking sector, bank size, bank capital, developed market economies, financial crisis, inflation performance

Abstract

The research aims to examine factors influencing the performance of banks in EMEs by placing focus on the USA’s banking sector performance. The study also seeks to establish ways and policies which can be used to enhance developed markets economies’ banking sector performance together with their financial and economic growth and development. Expectations are that this will enhance knowledge and understanding regarding significant variables influencing the financial development of developed market economies. The data was analyzed using an Auto Regressive Distributed Lag Models that was estimated using aggregate data of 1 372 banks insured by the FDIC from 1984 to 2018 using EViews 9.5. The results showed that bank capital and bank size have positive effects on bank performance. It was revealed that inflation and a financial crisis have adverse effects on bank performance. The research’s practical implications caution banks in the USA to continue working towards improving their asset management strategies to enhance their performance levels.

Downloads

Download data is not yet available.

References

Akoi, S., & Andrea, S. (2020). The determinants of the performance of the banking sector: evidence from an emerging market. Journal for Social Sciences (MEIJSS), 2(4), 192-202.

Bahadori, N., Kaymak, T., & Seraj, M. Environmental, social, and governance factors in emerging markets: The impact on firm performance. Business Strategy & Development.

Bayiley, Y. T. (2021). Macroeconomic and Firm-Specific Determinants of Bank Performance: A One-Step System GMM Dynamic Panel Model. Innovations, 87, 275-287.

Bhattarai, S., Chatterjee, A., & Park, W. Y. (2021). Effects of US quantitative easing on emerging market economies. Journal of Economic Dynamics and Control, 122, 104031.

Campello, M., Graham, J. R., & Harvey, C. R. (2010). The real effects of financial constraints: Evidence from a financial crisis. Journal of financial Economics, 97(3), 470-487.

Chand, S. A., Kumar, R. R., & Stauvermann, P. J. (2021). Determinants of bank stability in a small island economy: a study of Fiji. Accounting Research Journal, 34 (1), 22-42.

Derbali, A. (2021). Determinants of the performance of Moroccan banks. Journal of Business and Socio-economic Development, 1(1), 102-117.

Francis, M. E. (2013). Determinants of commercial bank profitability in Sub-Saharan Africa. International journal of economics and finance, 5(9), 134-147.

Gujarati, D. (2012). Econometrics by example. Macmillan.

Hansen, P., & Thisse, J. F. (1977). Multiplant location for profit maximisation. Environment and Planning A, 9(1), 63-73.

Heffernan, S. A., & Fu, X. (2010). Determinants of financial performance in Chinese banking. Applied Financial Economics, 20(20), 1585-1600.

Horobet, A., Radulescu, M., Belascu, L., & Dita, S. M. (2021). Determinants of bank profitability in CEE countries: Evidence from GMM panel data estimates. Journal of Risk and Financial Management, 14(7), 307.

Hwang, J. K. (2014). Spillover effects of the 2008 financial crisis in Latin America stock markets. International Advances in Economic Research, 20(3), 311-324.

Jara‐Bertin, M., Moya, J. A., & Perales, A. R. (2014), "Determinants of bank performance: evidence for Latin America", Academia Revista Latinoamericana de Administración, 27(2), 164-182.

Katırcıoglu, S., Ozatac, N., & Taspınar, N. (2020). The role of oil prices, growth and inflation in bank profitability. The Service Industries Journal, 40(7-8), 565-584.

Kripfganz, S., & Schneider, D. C. (2016, July). ardl: Stata module to estimate autoregressive distributed lag models. In Stata Conference, Chicago.

Kumar, M., Charles, V., & Mishra, C. S. (2016). Evaluating the performance of Indian banking sector using DEA during post-reform and global financial crisis. Journal of Business Economics and Management, 17(1), 156-172.

Ngo, T. (2012). Measuring the performance of the banking system: Case of Vietnam (1990-2010). Journal of applied finance and banking, 2(2), 289-312.

Nicola, M., Alsafi, Z., Sohrabi, C., Kerwan, A., Al-Jabir, A., Iosifidis, C., ... & Agha, R. (2020). The socio-economic implications of the coronavirus and COVID-19 pandemic: a review. International journal of surgery.

Nkoro, E., & Uko, A. K. (2016). Autoregressive Distributed Lag (ARDL) cointegration technique: application and interpretation. Journal of Statistical and Econometric methods, 5(4), 63-91.

Nouaili, M. A., Abaoub, E., & Ochi, A. (2015). The determinants of banking performance in front of financial changes: Case of trade banks in Tunisia. International Journal of Economics and Financial Issues, 5(2).

Pesaran, H. H., & Shin, Y. (1998). Generalized impulse response analysis in linear multivariate models. Economics letters, 58(1), 17-29.

Sun, P. H., Mohamad, S., & Ariff, M. (2017). Determinants driving bank performance: A comparison of two types of banks in the OIC. Pacific-Basin Finance Journal, 42, 193-203.

Tan, Y., & Floros, C. (2012). Bank profitability and inflation: the case of China. Journal of Economic Studies.

Tarawneh, M. (2006). A comparison of financial performance in the banking sector: Some evidence from Omani commercial banks. International Research Journal of Finance and Economics, 3(3), 101-112.

Tursoy, T., & Simbarashe Rabson, A. (2021). The Nexus between Agricultural Productivity, Oil Prices, Economic Growth, and Financial Development in the USA. Review of Innovation and Competitiveness: A Journal of Economic and Social Research, 7(1), 117-136.

Vong, P. I., & Chan, H. S. (2009). Determinants of bank profitability in Macao. Macau Monetary Research Bulletin, 12(6), 93-113.

Wagner-Tsukamoto, S. (2007). Moral agency, profits and the firm: Economic revisions to the Friedman theorem. Journal of Business Ethics, 70(2), 209-220.

Wong, J., Fong, T. P. W., Wong, E. T. C., & Choi, K. F. (2008). Determinants of the performance of banks in Hong Kong. In The Banking Sector in Hong Kong (pp. 50-65). Palgrave Macmillan, London.

World Trade Organization (2019). World Trade Statistical Review. Retrieved from https://www.wto.org/english/res_e/statis_e/wts2019_e/wts2019_e.pdf on 31May, 2019.