International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

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 Volume 11, Issue 9 (September 2024), Pages: 126-133

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 Original Research Paper

Determinants of bank profitability: An analysis using PMG estimation

 Author(s): 

 Abdullah Ewayed Twairesh 1, *, Ismail Ibrahim Bata 2

 Affiliation(s):

 1Department of Finance and Insurance, College of Business Administration, Northern Border University, Arar, Saudi Arabia
 2Entrepreneurship Institute, King Saud University, Riyadh, Saudi Arabia

 Full text

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 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0009-0001-3914-3928

 Digital Object Identifier (DOI)

 https://doi.org/10.21833/ijaas.2024.09.014

 Abstract

This study offers a new way of analyzing the factors that influence bank profitability. It uses data from 2009 to 2021, covering eight banks, to examine the effects of liquidity, operational efficiency, credit risk, capital adequacy, and deposit ratio (LON). The results, calculated using the pool mean group (PMG) estimator's panel autoregressive distributed lag (ARDL) method, reveal important insights. Notably, bank profitability is significantly and negatively affected by the LON, capital adequacy (CAR), credit risk (CR), and operational efficiency (OE). Liquidity variables showed no effect on profitability. This approach adds valuable understanding to the existing research on internal factors affecting bank profitability and provides useful guidance for regulators and bank managers to improve profitability.

 © 2024 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

 Bank profitability, Deposit ratio, Capital adequacy, Credit risk, Operational efficiency

 Article history

 Received 25 April 2024, Received in revised form 5 September 2024, Accepted 6 September 2024

 Acknowledgment

The authors extend their appreciation to the Deanship of Scientific Research at Northern Border University, Arar, KSA, for funding this research work “through the Project number “NBU-FFR–2024–2453–02.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Twairesh AE and Bata II (2024). Determinants of bank profitability: An analysis using PMG estimation. International Journal of Advanced and Applied Sciences, 11(9): 126-133

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 Tables

 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 

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