The Influence of Global Crude Oil Prices on Banking Sector Profitability: Panel Evidence from Selected Economies

Emmanuel Ezekiel Mwanjilinji and Fei-Ming Huang
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Emmanuel Ezekiel Mwanjilinji: Department of Statistics, University of Dar es Salaam, Tanzania School of Finance, Jiangxi University of Finance and Economics, China
Fei-Ming Huang: School of Finance, Jiangxi University of Finance and Economics, China

Asian Journal of Applied Economics/ Applied Economics Journal, 2025, vol. 32, issue 2, 164-187

Abstract: This study investigates the impact of global crude oil prices on banking sector profitability in 16 selected economies from 2000 to 2021. Using panel Autoregressive Distributed Lag (ARDL) analysis, the study explores both long-run and short-run relationships, incorporating GDP growth, inflation, and real interest rates as control variables. The results reveal a weak but positive long-term association between oil prices and bank profitability, while GDP growth significantly enhances profitability, and inflation exerts a negative effect. Real interest rates also show a positive influence. In the short run, none of the macroeconomic variables exhibit statistically significant effects. The findings suggest that macroeconomic stability—particularly sustained growth and inflation control—is essential for long-term banking sector performance. Policymakers and financial institutions should consider structural drivers and adopt strategies that enhance resilience to commodity price volatility.

Keywords: crude oil prices; banking profitability; panel ARDL; macroeconomic variables (search for similar items in EconPapers)
JEL-codes: C33 E44 G21 Q43 (search for similar items in EconPapers)
Date: 2025
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