Determinants of bank profitability before, during, and after the financial crisis

Adelopo, Ismail; Lloydking, Robert; Tauringana, Venacious

Abstract

© 2018, Emerald Publishing Limited. Purpose: The purpose of this paper is to report the results of an investigation into the relationship between bank-specific, macroeconomic factors and bank profitability before (1999-2006), during (2007-2009), and after (2010-2013) the financial crisis. Design/methodology/approach: Using the Economic Community of West African States’ bank panel data from 1999 to 2013, the paper used fixed effect models. The panel model includes bank-specific determinants (size, cost management, and liquidity), industry level, and macroeconomic variables. Findings: Panel data analyses results show that there is a significant relationship between bank-specific determinants (size, cost management, and liquidity) and bank profitability (ROA) before, during, and after the financial crisis. However, the relationships between other bank-specific (capital strength, credit risk, and market power), macroeconomic (gross domestic product and inflation) determinants are sensitive to both periods of analysis (before, during, and after financial crisis) and bank profitability measure used (ROA or NIM). Originality/value: Overall, these results suggest that the financial crisis did not affect the relationships between some bank-specific determinants and bank profitability.

• Journal Article Type: Article
• Acceptance Date: Nov 19, 2017
• Online Publication Date: Mar 9, 2018
• Publication Date: Aug 6, 2018
• Deposit Date: Nov 21, 2017
• Publicly Available Date: Mar 19, 2018
• Journal: International Journal of Managerial Finance
• Print ISSN: 1743-9132
• Publisher: Emerald
• Peer Reviewed: Peer Reviewed
• Volume: 14
• Issue: 4
• Pages: 378-398
• DOI: https://doi.org/10.1108/IJMF-07-2017-0148
• Keywords: banks, profitability, international business, Economic Community of West African States (ECOWAS), macroeconomic environment, financial crisis
• Public URL: https://uwe-repository.worktribe.com/output/878530
• Publisher URL: http://dx.doi.org/10.1108/IJMF-07-2017-0148
• Additional Information: Additional Information : This is the author's accepted manuscript. The final published version is available here: http://dx.doi.org/10.1108/IJMF-07-2017-0148.
• Contract Date: Nov 21, 2017