The determinants of bank profitability: dynamic panel evidence from South Asian countries

Shahidul Islam and Shin-Ichi Nishiyama

No 44, DSSR Discussion Papers from Graduate School of Economics and Management, Tohoku University

Abstract: Using the GMM estimator, this paper empirically studies the bank-specific, industry specific and macroeconomics specific determinants of bank profitability of 259 commercial banks in the South Asian countries (Bangladesh, India, Nepal and Pakistan) in the period of 1997-2012. Empirical results show a low level of profit persistency and a late-hit of the global financial crisis in the banking sector in the region. We found no evidence for the traditional SCP hypothesis in relation to banking profit but financial solvency and managerial excellence have positive affiliation. Cost of fund, liquidity, funding gap, term structure of interest rate and economic growth rate found negative influence while rate of inflation positively affect bank profit. Also to report that South Asian banks are operating with 'inefficient' manpower.

Pages: 34 pages
Date: 2015-05-07
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Determinants of Bank Profitability: Dynamic Panel Evidence from South Asian Countries (2016)
Working Paper: The determinants of bank profitability: dynamic panel evidence from South Asian countries (2015)
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