تقييم ومقارنة الأداء المالي للبنوك التجارية باستخدام النسب المالية

The explanatory power of the bank specific financial ratios on return on equity of the joint venture commercial banks operated in Nepal has been examined by using the database of 15 years from 2005/06 to 2019/20. The descriptive and correlational research design have been adopted for the study. The explanatory financial ratios used for the study includes capital adequacy, non-performing loan to total loan, net interest to total assets ratio, deposit to total assets ratio, and investment to total assets ratio. Statistical tools such as descriptive statistics, correlation analysis, and the regression analysis have been used as the major tools of data analysis. The results revealed that capital adequacy ratio, net interest to assets ratio and investment to assets ratio have the significant positive impact on commercial banks profitability. In contrast, non-preforming loan to total loan has the significant negative impact on banks' profitability whereas, deposit to total assets ratio has no significant impact on commercial banks' profitability.

Purpose Of the Study: Evolution of the business environment has forced the financial institutions to turn around and change their own business models in order to retain their loyal customer base. The commercial banks have certainly faced their own fair share of challenges when they had to introduce innovations in their products and processes and simultaneously strengthen their financial health with sustained risk governance techniques and decisions. Thus, the purpose of the study is to understand the importance of sustainability of firm value for a banking business, and how financial attributes and risk governance factors can impact the farm valuation of Indian commercial banks. A Brief Literature Review: Over the years authors have tried studying the relation between firm value and various financial attributes. In certain instances, risk governance techniques like the capital adequacy ratio have also been introduced in various studies. In a study, the author tried to study the relationship between financial risks and firm value and examine the moderating effect that capital adequacy has on the relationship between financial risk and firm value. The results of the study indicated that a higher capital adequacy ratio increases form value and has a moderating effect on financial risk and firm value (Jagirani et al., 2023). Similarly, certain authors over the years have also tried to find out the effectiveness of Risk Committee on the financial success of certain quoted banks in African countries. (Odubuasi et al., 2022) focused specifically on risk committee diligence committee composition committee diversity, committee expertise, committee size and return on equity of the country’s selected from Africa. The fixed effect model employed by them reported that the impact of the diligence and composition of risk committee on bank performance in certain African countries was highly significant. Thus, they concluded that risk committee effectiveness, its diligence, its composition and various leverage factors should be pivotal in the formulation of risk management committee of various organisations, and especially banks. The Methodology Adopted: Content analysis and panel data has been employed in the study to understand the implications of the financial attributes and risk governance factors on the sustainability in the firm value of Indian commercial banks. Financial attributes like Net Interest Margin, Cash Deposit ratio, Volume of digital transactions, etc. and risk governance attributes like the presence of a chief risk officer, the activism of the risk committee, etc. have been used in the study. Tobin’s Q has been taken as the proxy of firm value in the study as well. The hierarchical regression analysis has been the economic modelling technique used in the study to achieve the study purpose. Study Hypothesis: Since hierarchical regression modelling has been used in the study, the aim of the study is to assess whether the overall model of firm value of the banking business gets better with the gradual introduction of certain financial attributes variables and risk governance variables or not. Accordingly, with each step and introduction of certain attributes and variables into the model, research hypothesis in the study has been developed. Results & Findings: The study is an attempt at introducing a functional model with some significant financial ratios, some crucial ratios that define the characteristics of the bank and the risk governance framework with the firm value. The logic behind using the Tobin’s Q as a proxy of firm value is that unlike several other financial ratios that solely focus on the book value of the variables; the Q ratio takes the market capitalization value of the banks into account in the study. Through the study, almost all the explanatory variables like CDR, ROE, ROA etc. showed a positive and significant relationship with firm value in the first 2 models whereas on the other hand, introducing risk governance in the third model made it too complicated. As a result, the model was proven insignificant and unproductive unlike the first 2 models. Limitations: There is a lot of scope for further research on this particular subject as the model could be developed in a lot of ways to explain how different variables may it be financial ratios, risk governance or financial innovativeness rating etc. could impact the firm value which in turn impacts the managerial decision making of senior executives and the economy as a whole and further help in making the banking business is sustainable. Implications: The study gives us a glimpse of certain financial attributes and various risk governance factors that could be used to maintain and sustain the firm value of commercial banks in India. It is certainly essential to focus on the sustainability of firm value of commercial banks, for the reason that banks are the lifeblood of an economy and help act as the mediating factor between deposits, savings and investment in the economy.

While the current body of literature offers valuable insights into the factors influencing bank financial performance, there is a significant paucity of empirical research focusing on least developed nations. This paper presents new evidence of the effect of bank size, capital adequacy ratio (CAR), and net interest margin (NIM) on banks’ return on assets (financial performance) from the perspective of Tanzania – a least-developed country. We employed the Random Effect, and the Generalized Least Squares (GLS) regression models utilizing a panel dataset spanning the period 2000 to 2022 of ten (10) Tanzanian commercial banks to examine the specific effect of the foregoing variables on commercial banks’ financial performance. The estimation results show that capital adequacy ratio (CAR) and bank size have positive significant effects on the financial performance of commercial banks in Tanzania. Whereas we found inconsistent results for the effect of NIM; while the random effect model shows a marginally significant positive effect on ROA, the GLS regression shows a significant negative effect, indicating that the effect of NIM could be either positive or negative depending on the context. Therefore, policymakers should prioritize measures aimed at promoting healthy levels of capital adequacy and encouraging the growth of larger banks while ensuring adequate oversight to mitigate potential risks associated with market dominance. Additionally, regulatory frameworks should be designed to foster competition and efficiency in the banking sector, facilitating a conducive environment for banks of all sizes to thrive and thus contribute to economic growth.

This paper empirically analyzes the impact of liquidity risk on key financial performance aspects of Islamic banks in the UAE. To document the association between liquidity risk and other performance ratios, time series data are taken for full-fledged Islamic banks working in the UAE from 2000 to 2014. Liquidity ratios and capital adequacy ratios, profitability ratios, and tangibility ratios are determined. Correlation and regression analyses are used to test the study hypotheses using SPSS. The findings indicate that capital adequacy and tangibility ratios are the main factors to determine liquidity risk of UAE Islamic banks. Furthermore, the results showed that the size of Islamic banks’ assets and capital adequacy had a positive and significant association with liquidity risk. Policymakers and Islamic finance experts should devote more attention to enhancing the base of Islamic finance assets to manage liquidity issues.

Capital Adequacy Ratio (CAR) is one of the main indicators used to measure the level of security and financial stability of a bank. This research aims to analyze the factors that influence the Capital Adequacy Ratio in commercial banks listed on the Indonesia Stock Exchange. The data used is panel data from 2016 to 2020 which includes 20 commercial banks. The independent variables used in this research are Return on Equity (ROE), Net Interest Margin (NIM), Loan to Deposit Ratio (LDR), and Non-Performing Loans (NPL). The research results show that ROE and NIM have a significant influence on the Capital Adequacy Ratio. However, LDR and NPL do not have a significant influence on CAR. The implication of this research is the importance of credit risk management, asset management and liquidity management in maintaining bank capital adequacy levels.

This study examined the relation between debt and profitability ratios separately for income smoother and Non-smoother Company. The study community includes the company listed in Tehran Stock Exchange (TSE) and the study period is between 2008 and 2012. For this, using the company was classified into two groups of income smoothing and non-smoothing company using ECKEL index. Correlation and regression testing is used to analyse the data. The findings showed that there is a significant relation between debt and asset ratios and profitability ratios in smoothers and Non-smoothers Company, and income smoothing has no effect on the relation between debt ratios and profitability ratios of companies.

Risk management is a good potential events that can be predicted and unpredicted negative impact on income and capital of the Bank. Financial ratios are an alternative to test whether financial ratios useful for making predictions on future profitability. CAR, NPL and LDR is a measure of the ability to predict profitability. Sampling technique used is purposive sampling with criteria Conventional Commercial Bank do / unlock (Dual Banking System) Islamic Banks serving the financial statements of the period 2012 to 2015. The data obtained by the publication of the FSA Directory. Obtained a total sample of 16 with the division 8 8 Conventional Commercial Bank and Commercial Bank Syariah. The independent variables in this study is the Capital Adequacy Ratio (CAR), Non performace loans (NPLs) and loan to deposit ratio (LDR) while Return on Assets (ROA) as the dependent variable. Methods of data collection in this study is documentation and literature. During the period show that the study data were normally distributed. Based on the test multicollinearity, heteroscedasticity test and autocorrelation test found no deviation from the classical assumption, it indicates that the available data are qualified to use a multiple linear regression model. The comparison of this study showed that the CAR and NPL variable Conventional Commercial Bank affect the ROA, LDR whereas no effect. In contrast to the conventional, all variables Islamic Banks are CAR, LDR and NPL effect on ROA.

Cater to the Regulatory Requirements and the Application of Fair Value Accounting - Evidence from Listed Banks in China

This study examined the bank specific, regulatory and macro-economic factors that affect liquidity of Ethiopian commercial banks. The data covered the period from 2010-2019 GC for the sample of selected seven commercial banks. Quantitative research approach and explanatory design adopted in carrying out this research. Secondary data was collected from the selected seven commercial banks using purposive sampling technique. The fixed effect regression technique used by econometric package EViews10. The variables are from three factors that, Bank size, Capital adequacy ratio, Profitability and Deposit growth are from bank specific factors, Reserve requirement and NBE bill purchase are from regulatory factors and GDP is from macro-economic factors is selected by researcher. The results of balanced fixed effect panel data regression analysis showed that deposit growth, capital adequacy, bank size and NBE bill purchase had positive effect on liquidity at different significance level. On the other hand, profitability, reserve requirement and gross domestic product affect liquidity of commercial banks in Ethiopia negatively. Keywords: Ethiopian commercial banks, factors of liquidity, fixed effect regression, purposive sampling. DOI: 10.7176/RJFA/13-8-06 Publication date: April 30 th 2022

Capital adequacy implies the conventional assessment of the minimal level of capital, according to certain parameters, which reflect the dimension of banking activity and of related risks, capable to provide a correlation between the supposed obtained benefits and potential loss caused by a certain risk level. Since Capital adequacy ratio (CAR) is the ratio that is set by the regulatory authority in the banking sector, and this ratio can be used to test the health of the banking system. Thus, this study examines the effect of bank specific (Bank Size ,Deposit to Asset Ratio, Loan to Asset Ratio, Loan to Deposit Ratio, Return on Asset, Return on Equity ,Loan Loss Provision) and macroeconomic determinants (Gross Domestic Product and Inflation) on capital adequacy ratio of Ethiopian Private Commercial Banks. In order to investigate these issues a quantitative method research approach is utilized, by using documentary analysis. More specifically, the study uses five years (2016 – 2020) data for fourteen private commercial banks in Ethiopia. The study used multiple linear regression models to determine the relative importance of each independent variable using OLS to estimate the relationship between CAR its determinants by STATA 13 econometric software. The findings show that bank size, return on equity ,loan to asset ratio affect capital adequacy ratio negatively whereas return on asset ,loan loss provision affect capital adequacy ratio positively .Hence , it is recommended that to be sure that to be sure that bank have adequate adequacy reserve ,commercial bank and national bank of Ethiopia should give attention to the risk associated with bank size ,caring bank loan and deposit initiating to increase their return on their return on their asset and to manage their equity return. Keywords: Capital adequacy ratio, Ethiopian Private Commercial Banks, Panel data analysis DOI: 10.7176/RJFA/11-21-01 Publication date: November 30 th 2020

The paper aims to estimate the effect of macro-economic factors on the capital adequacy ratio at commercial banks in Vietnam: national governance quality, COVID-19, economic growth, and inflation. Using the quantitative method (feasible generalised least squares-FGLS and generalised method of moments-GMM), except for inflation, the remaining macro-economic factors are statistically significant at 5%. It means that national governance quality and economic growth hurt the capital adequacy ratio, while COVID-19 affects the ratio positively. The study also highlights the role of compliance in maintaining capital adequacy during a global crisis, such as the COVID-19 outbreak, because commercial banks will need more capital to absorb shocks in the period of financial instability caused by the pandemic. Furthermore, the author has tackled endogeneity concerns by using instrumental variables and conducted robustness tests to enhance the reliability and impartiality of the research findings.

Capital adequacy rules are safety valve for regulators and banks’ clients/shareholders to reduce expected risks faced by commercial banks especially for cross border transactions as these rules are applied compulsory by all banks internationally. Applying these rules will achieve rational management and governance. This paper examines explanatory victors that influence capital adequacy ratio (CAR) in the Egyptian commercial banks. The study covers 36 banks during the period from 2003-2013. We examined the relationship between CAR as dependent variable and the following independent variables: earning assets ratio, profitability, and liquidity, Loan loss provision as measure of credit risk, net interest margin growth, size, loans assets ratio and deposits assets ratio. Furthermore, we investigate determinants of CAR before and after the 2007-2008 international financial crises. Results vary according to the period understudy. For the whole period 2003 to 2013 results show that liquidity, size and management quality are the most significant variables. Before the period 2008 results show that asset quality, size and profitability are the most significant variables. After the period 2009 results show that asset quality, size, liquidity, management quality and credit risk are the most significant variable that explain the variance of Egyptian banks’ CAR.

Commercial banks are crucial in determining a nation's economic growth and stability. The study objective was to determine the variables that affect Kenya's commercial banks financial performance. ROA measurement of financial performance served as the dependent variable. The independent factors included bank size, managerial effectiveness, asset quality, liquidity, and capital adequacy. To explain the relationship between the dependent and independent variables, the study employed a descriptive research approach. The analysis was done using a multiple linear regression model with secondary data obtained from banks audited yearly financial statements. The findings revealed that the predictor variables accounted for 40.6% of changes in financial performance while 59.4% changes in financial performance could be explained by other internal factors not considered in this study. Additionally, it was established that AQ and SZ had a favorable impact on ROA, supporting the idea that a rise in AQ and SZ causes an increase in ROA. On the other hand, CA, LR and ME had negative effect on ROA leading to the conclusion an increase in CA, LR and ME leads to a decrease in ROA. The study recommended that the CBK adopt flexible policy to match the prevailing economic and market conditions in determining the minimum capital adequacy and liquidity ratios to caution banks from holding excessive capital and assets. A study on the impact of CAMEL indicators on financial performance including all commercial banks in Kenya was recommended because the study left out earning capacity as an internal factor. Keywords: Financial Performance, Capital Adequacy, Asset Quality, Management Efficiency, Size & Liquidity

The last few decades have witnessed an increasing drive for bank presence across Ghana due to commercial banks appetite for increased deposit mobilization. Although bank presence is crucial in savings mobilization for economic growth and development, its relationship with the financial performance of the banks is unknown within the context of a developing economy. The current study therefore investigates the implications of banks presence on the financial performance of the commercial banks in Ghana, using data from 2007 to 2013. Panel regression is used for the estimation. Our findings show that increasing banks presence does not necessarily translate into profitability of the commercial banks. A plausible deduction from the results indicate that growth in bank presence (bank branches) cannot improve alternate distribution channels of banks operations due to the strong competition in the financial sector, cost of operations and low savings culture in Ghana. The results also reveal that market concentration, cost management, capital adequacy and activity mix contribute positively to the financial performance of commercial banks in Ghana but not credit risk and management quality. We also document that the macroeconomic environment has positive effects on the financial performance of commercial banks. Following the above, we recommend that commercial banks should pay critical attention to bank specific factors such as cost management and capital adequacy ratios. Moreover, managers of the economy should strive to create a conducive and stable environment to increase their penetration in Ghana.

The main objective of this study was to determine the specific internal factors that Affect the provision of banking services by the bank. This study was specific to Zambia National Commercial Bank (ZANACO). In studying the various factors, it was envisaged that the research would provide an understanding of the impact that specific factors identified would have on the overall provision of financial services by the financial institution. The period considered was 2008 to 2018. Multiple regressions were used to conduct the analysis, using SPSS program.The results of the study show that bank size has a negative and statistically significant effect on performance of banks.Capital adequacy is a critical bank specific factor that influences the level of bank profitability. It is an indicator of the level of capital required by the banks to enable them withstand risks such as credit, market and operational risks they are exposed to in order to absorb the potential loses and protect the bank's debtors (Ongore and Kusa Ongore and Kusa, .Int. J. Econ. Fin. Issues 3:237–252, 2013). The capital adequacy ratio of a bank therefore demonstrates the internal strength of the bank to support losses during crisis periods.The study undertaken shows that capital adequacy has a negative impact on performance of Zanaco, which is statistically significant contrary to expectations. The result suggests that a higher capital ratio leads to or predicts lower profitability, consistent with the findings of Frederic (2014), who found a negative impact of capital-assets ratio among banking sector over the period of his study.Further, there is a negative relationship between liquidity and profitability. There is need for a more risk averse approach by Zanaco in its efforts to raise its loan portfolio. This is because Non-Performing Loans (NPLs) levels contribute to the reduction of profitability. From the data reviewed, this maybe because of Zanaco experiencing large losses amounting from increasing rate of NPLs.Overall, banks as a rule do have large amount of liquidity owing to the large savings deposits that are pooled from individual public’s savings. However, the large savings base is also characterised by even fewer opportunities for investments of these funds. Many business that have borrowed from the banks have failed to repay their loans overtime, resulting in a reclassification of their accounts as bad credit following the Bank’s failure to fully recover the outstanding balances.The previously mentioned, the amount of bad debt that a bank holds on its books has a direct impact on the perceived performance of the bank. Further, the findings of the study on Zanaco show a correlation between income diversification and financial performance.Liquidity, operational cost efficiency, capital adequacy and asset quality of the Bank were found to have a negative effect on the financial performance of the commercial banks in Zambia.KeywordsFinancial performanceProfitabilityBank SizeLiquidity RatioCapital AdequacyOperational EfficiencyIncome diversificationAsset Ratio