Examining the determinants of commercial banks’ profitability in fertile crescent countries

There are a large number of studies examining the determinants of bank profitability, either at the country level or even at the cross-country level. However, an area that has not been adequately explored is the impact of the political instability on banking systems. Political instability has a detr...

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Main Author:	Salem, Salem Mohammad Abdelaziz
Format:	Thesis
Language:	eng eng
Published:	2020
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/10313/1/permission%20to%20deposit-grant%20the%20permission-99165.pdf https://etd.uum.edu.my/10313/2/s99165_01.pdf
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id	my-uum-etd.10313
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spelling	my-uum-etd.103132023-02-12T07:59:21Z Examining the determinants of commercial banks’ profitability in fertile crescent countries 2020 Salem, Salem Mohammad Abdelaziz Abdul Rahman, Nora Azureen Saif, Abdulazeez Yousef Hazzaa School of Economics, Finance & Banking School of Economics, Finance and Banking HG Finance There are a large number of studies examining the determinants of bank profitability, either at the country level or even at the cross-country level. However, an area that has not been adequately explored is the impact of the political instability on banking systems. Political instability has a detrimental effect on economic, financial and political systems. In addition, research on the profitability of banks in the Fertile Crescent Countries (FCC) is very limited despite being one of the key global banking markets and an unstable area as well. Hence, this study provides a new insight on bank profitability using political risk indicators. Using system generalized method of moment dynamic model estimation; this study examines the effect of political risk, bank-specific, industry-specific, and macroeconomic factors on the profitability of banks in FCC region over the period of 1996-2018. The results show that there is a significant direct impact of political risk on bank profitability. It also finds that the bank-specific factors, industry-specific, and macroeconomic factors are significant determinants of bank profitability in FCC region. In terms of theories, the study finds evidence to support the political risk theory and resource-based theory, while it finds no evidence to support the structure conduct performance theory. The results are also robust when controlling the global financial crisis and when using panel data techniques. The findings of this study have major policy implications. FCC authorities need to counteract the negative impact of political risk by increasing supervision, improving the quality of current banking activities, mitigating the problem of non-performing loans, and avoiding the negative impact of macroeconomic conditions. FCC banks also need to track policy changes because these changes affect their profitability. Moreover, local banks should be encouraged to invest in safe-haven international financial markets to mitigate risk 2020 Thesis https://etd.uum.edu.my/10313/ https://etd.uum.edu.my/10313/1/permission%20to%20deposit-grant%20the%20permission-99165.pdf text eng staffonly https://etd.uum.edu.my/10313/2/s99165_01.pdf text eng public other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Abdul Rahman, Nora Azureen Saif, Abdulazeez Yousef Hazzaa
topic	HG Finance
spellingShingle	HG Finance Salem, Salem Mohammad Abdelaziz Examining the determinants of commercial banks’ profitability in fertile crescent countries
description	There are a large number of studies examining the determinants of bank profitability, either at the country level or even at the cross-country level. However, an area that has not been adequately explored is the impact of the political instability on banking systems. Political instability has a detrimental effect on economic, financial and political systems. In addition, research on the profitability of banks in the Fertile Crescent Countries (FCC) is very limited despite being one of the key global banking markets and an unstable area as well. Hence, this study provides a new insight on bank profitability using political risk indicators. Using system generalized method of moment dynamic model estimation; this study examines the effect of political risk, bank-specific, industry-specific, and macroeconomic factors on the profitability of banks in FCC region over the period of 1996-2018. The results show that there is a significant direct impact of political risk on bank profitability. It also finds that the bank-specific factors, industry-specific, and macroeconomic factors are significant determinants of bank profitability in FCC region. In terms of theories, the study finds evidence to support the political risk theory and resource-based theory, while it finds no evidence to support the structure conduct performance theory. The results are also robust when controlling the global financial crisis and when using panel data techniques. The findings of this study have major policy implications. FCC authorities need to counteract the negative impact of political risk by increasing supervision, improving the quality of current banking activities, mitigating the problem of non-performing loans, and avoiding the negative impact of macroeconomic conditions. FCC banks also need to track policy changes because these changes affect their profitability. Moreover, local banks should be encouraged to invest in safe-haven international financial markets to mitigate risk
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Salem, Salem Mohammad Abdelaziz
author_facet	Salem, Salem Mohammad Abdelaziz
author_sort	Salem, Salem Mohammad Abdelaziz
title	Examining the determinants of commercial banks’ profitability in fertile crescent countries
title_short	Examining the determinants of commercial banks’ profitability in fertile crescent countries
title_full	Examining the determinants of commercial banks’ profitability in fertile crescent countries
title_fullStr	Examining the determinants of commercial banks’ profitability in fertile crescent countries
title_full_unstemmed	Examining the determinants of commercial banks’ profitability in fertile crescent countries
title_sort	examining the determinants of commercial banks’ profitability in fertile crescent countries
granting_institution	Universiti Utara Malaysia
granting_department	School of Economics, Finance & Banking
publishDate	2020
url	https://etd.uum.edu.my/10313/1/permission%20to%20deposit-grant%20the%20permission-99165.pdf https://etd.uum.edu.my/10313/2/s99165_01.pdf
_version_	1776103788566806528

Examining the determinants of commercial banks’ profitability in fertile crescent countries

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