عنوان انگلیسی مقاله:

Banks’ Profitability and Financial Soundness Indicators: A Macro Level Investigation in Emerging Countries

ترجمه عنوان مقاله: سودآوری بانک ها و شاخص داشتن توانایی مالی: یک بررسی سطح کلان در کشورهای نوظهور

رشته: مالی و حسابداری

سال انتشار: 2015

تعداد صفحات مقاله انگلیسی: 7 صفحه

منبع: الزویر و ساینس دایرکت

نوع فایل: pdf

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چکیده مقاله

The banking sector profitability has shrunk considerably after the setup of the global financial crisis, both in developed and emerging countries. The non-sustainable credit policies practiced by banks before the crisis have largely contributed to this distress. In particular in emerging markets, an easy access to credits has generated, after the financial turbulences, a considerable amount of non-performing loans which have subsequently affected the banks’ profitability. In addition, the need for an increased capitalization is also susceptible of negatively influencing the profitability in the short-run. Against this background, we test the influence of financial soundness indicators on the banks’ profitability, at the macro-level, in a set of emerging countries.
Different from previous studies which assess the impact of the banking sector characteristics and of the macroeconomic context on the profitability, we focus on the internal conditions of banks. Using the IMF monthly data for the period 2005-2013 and a panel data approach, we discover that non-performing loans have a negative impact on banks’ profitability under the fixed effect model. While the level of liquidity has a mixed influence, the capitalization and the interest rate margins positively affect the banks’ profitability. As expected, the non-interest expenses negatively impact the profitability. The results prove robust either if we use the return on assets or the return on equity indicator to measure the level of profitability.

Keywords: Banking sector profitability; internal determinants; financial soundness indicators; emerging countries.

مقدمه مقاله

Managerial performance, as the indicator of the successfulness of managers to realize goals, becomes one of the most prominent keys that should be improved over time. The improvement of managerial performance can be sought through improvement of decision making process. In decision making process, managers utilize information and their interpretation skills to make an effective decision. However, according to Bounded Rationality Theory (Simon, 1978) managers as decision makers are bounded by some constraints in making a rational and effective decision. These constraints, include 1) the limited availability of information, 2) limitation capacity of human mind and 3) limited amount of time to make decision, have resulted the managers to becomelocally rational in decision making process.

To prevent a dysfunctional decision making caused by bounded rationality, managers need a specific skill to enable them in utilizing information properly. A set of skills that enable individuals in recognizing information, identifying information, utilizing and interpreting information is called information literacy (Mishra and Mishra, 2010). Information literacy skills will enable managers in utilizing, evaluating, organizing, integrating, and interpreting information critically and properly in problem solving (Doyle, 1992). By having these skills, managers will be able to use information effectively and thus will enable them in making an effective and proper decision. A rational and proper decision will then enable managers to solve problems in executing managerial function and thus improve their managerial performance.

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