This study examines the determinants of profitability of commercial banks in Albania. These determinants are categorized into two groups, internal factors that are the bank specific factors and external factors that are further divided into macroeconomic factors and industry specific factors.
The main objective of the study is to determine the factors affecting the profitability of commercial banks and making some recommendations, that maybe can help the management and policymakers. A panel data with 16 commercial banks in Albania is analyzed for the period 2009-2014. Two indicators are used (dependent variables) for the measurement of profitability, return on assets (ROA) and return on equity (ROE). Banking specific factors that are used in this study include variables such as bank size, asset management, credit risk, liquidity of assets, capital adequacy, operational efficiency and cost of financing. On the other hand is taken into consideration only one industry specific factor, which is the concentration and macroeconomic factors such as GDP, inflation and exchange rate.
To meet the main object of the research, the study is based mainly on quantitative research method, which is supplemented by a qualitative method. Quantitative data were obtained mainly from the financial statements of commercial banks, by INSTAT, Bank of Albania, and World Bank, in order to make empirical analysis needed to identify and measure the determinants of bank profitability. In particular, multiple regression analysis was used to measure the impact of the determinants of bank profitability. On the other hand, qualitative data were collected through unstructured interviews conducted with executives of finance in the albanian commercial banks. To realize empirical analysis were used the software SPSS 22 and Eviews 7.
Inhaltsverzeichnis (Table of Contents)
- CHAPTER 1
- 1.1 A General Overwiew
- 1.2 Evidence of the Problem
- 1.3 Objective of the Study
- 1.4 Hypothesis of the Study
- 1.5 Conceptual Framework
- 1.6 Methodology and Data
- 1.7 Study Limitations
- 1.8 The Importance of the Study
- 1.9 Organization of the Study
- CHAPTER 2
- 2.1 A Short History of the Albanian Banking System
- 2.2 Economic Importance of Commercial Banks
- 2.3 Structure of Financial/Banking System
- 2.4 Main Developments in the Performance of the Albanian Banking System
- CHAPTER 3
- 3.1 Introduction
- 3.2 Theoretical Profitability Analysis
- 3.3 Determinants Factors of Profitability
- 3.4 Internal Factors
- 3.5 External Factors
- CHAPTER 4
- 4.1 Research Approaches
- 4.2 The Applied Method
- 4.3 Data Collection
- 4.4 Data Analysis and Model Specification (ROA/ROE)
- 4.5 Statistical Examination of Determinants
- 4.6 Diagnostic Tests of the Model
- 4.7 Hypotheses of Study
- CHAPTER 5
- 5.1 Tests for Model Validation (ROA/ROE)
- 5.2 Correlation Analysis for Profitability Models (ROA/ROE)
- 5.3 Descriptive Data Statistic for Profitability Models (ROA/ROE)
- 5.4 Granger Cause Test for ROA Model
- 5.5 The Results of the Regression Analysis for the Model (ROA)
- 5.6 Granger Cause Test for ROE Model
- 5.7 The Results of the Regression Analysis for the Model (ROE)
- 5.8 Bank Profitability Analysis (ROA/ROE) by Groups
- 5.9 Interview Findings
- CHAPTER 6
- 6.1 Conclusions
- 6.2 Recommendations
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This study explores the factors influencing the profitability of commercial banks in Albania. It categorizes these determinants into internal factors, specific to the bank, and external factors, including macroeconomic and industry-specific variables. The research aims to identify the significant factors impacting bank profitability and to provide recommendations for improved management and policy decisions.
- Impact of internal and external factors on bank profitability in Albania
- Analysis of specific variables such as bank size, asset management, credit risk, liquidity, capital adequacy, operational efficiency, and cost of financing.
- Evaluation of industry-specific factors like concentration and macroeconomic variables like GDP, inflation, and exchange rate.
- Application of quantitative and qualitative research methods, including multiple regression analysis and interviews with bank executives.
- Identification of causal relationships between dependent and independent variables using Granger causality tests.
Zusammenfassung der Kapitel (Chapter Summaries)
Chapter 1 sets the stage for the study by providing a general overview of the topic and outlining the research problem. It highlights the motivations for conducting the study, defines the research objectives, and presents the study's hypothesis, conceptual framework, methodology, limitations, and importance. It also discusses the study's organization. Chapter 2 delves into the Albanian banking system, exploring its history, economic importance, structure, and key performance developments.
Chapter 3 explores the theoretical framework of profitability analysis. It examines determinants of profitability, distinguishing between internal and external factors, and analyzing specific factors within each category. The chapter lays the groundwork for the empirical analysis by providing a theoretical foundation for understanding the drivers of bank profitability.
Chapter 4 outlines the research approaches used in the study. It details the applied methods, data collection techniques, data analysis and model specifications, and the statistical examination of determinants. The chapter also discusses diagnostic tests of the model and the study's hypotheses.
Chapter 5 focuses on the empirical analysis of bank profitability. It presents the results of model validation, correlation analysis, descriptive data statistics, Granger causality tests, and regression analysis for the ROA and ROE models. The chapter also examines bank profitability by groups and presents findings from interviews conducted with bank executives.
Schlüsselwörter (Keywords)
This research primarily focuses on the determinants of profitability in commercial banks in Albania. It explores both internal and external factors influencing profitability, including bank-specific factors, macroeconomic variables, and industry-specific considerations. The study analyzes profitability using Return on Assets (ROA) and Return on Equity (ROE) as key performance indicators.
- Quote paper
- Arjeta Hallunovi (Author), 2018, Determinants of profitability in commercial banks in Albania, Munich, GRIN Verlag, https://www.grin.com/document/429323
