The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy

Khaled Zedan Zedan

doi:doi:10.11648/j.ijafrm.20220703.12

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The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy

Khaled Zedan Zedan

Published in International Journal of Accounting, Finance and Risk Management (Volume 7, Issue 3)

Received: 3 May 2022 Accepted: 8 July 2022 Published: 20 July 2022

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Abstract

In this ever-changing competitive environment, the banking business, compared to other types of business, is ultimately exposed to risks. Banks now days are operating in a rapidly innovative industry with a lot of profit pressure that encourage them to create more and more value-added services to offer and better satisfy the customers. The Palestinian banking system operate in a risky, complex, changeable economic and political environment, bank managements should be aware of these circumstances. This study attempts to examine the impact of credit risk, liquidity, capital, and market structure on banks' profitability in a developing economy (Palestine) over eleven years (2010 - 2020). A dynamic panel analysis is applied to the sample of 12 banks with three econometric models representing profitability indicators employed by the study. In addition to the linear regression models, we used a Generalized Method of Moments (GMM) estimator. The results revealed that credit risk, liquidity, capital, and market structure impact bank profitability measured by ROA, ROE, and NPM. Cost efficiency, income diversification, and loan growth have been used as control variables had a significant impact on profitability except for loan growth had no impact.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 7, Issue 3)
DOI	10.11648/j.ijafrm.20220703.12
Page(s)	99-107
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Bank Performance, Non-performing Loans, Palestine, Income Diversification

References

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APA Style

Khaled Zedan Zedan. (2022). The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy. International Journal of Accounting, Finance and Risk Management, 7(3), 99-107. https://doi.org/10.11648/j.ijafrm.20220703.12

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ACS Style

Khaled Zedan Zedan. The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy. Int. J. Account. Finance Risk Manag. 2022, 7(3), 99-107. doi: 10.11648/j.ijafrm.20220703.12

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AMA Style

Khaled Zedan Zedan. The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy. Int J Account Finance Risk Manag. 2022;7(3):99-107. doi: 10.11648/j.ijafrm.20220703.12

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@article{10.11648/j.ijafrm.20220703.12,
  author = {Khaled Zedan Zedan},
  title = {The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {7},
  number = {3},
  pages = {99-107},
  doi = {10.11648/j.ijafrm.20220703.12},
  url = {https://doi.org/10.11648/j.ijafrm.20220703.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20220703.12},
  abstract = {In this ever-changing competitive environment, the banking business, compared to other types of business, is ultimately exposed to risks. Banks now days are operating in a rapidly innovative industry with a lot of profit pressure that encourage them to create more and more value-added services to offer and better satisfy the customers. The Palestinian banking system operate in a risky, complex, changeable economic and political environment, bank managements should be aware of these circumstances. This study attempts to examine the impact of credit risk, liquidity, capital, and market structure on banks' profitability in a developing economy (Palestine) over eleven years (2010 - 2020). A dynamic panel analysis is applied to the sample of 12 banks with three econometric models representing profitability indicators employed by the study. In addition to the linear regression models, we used a Generalized Method of Moments (GMM) estimator. The results revealed that credit risk, liquidity, capital, and market structure impact bank profitability measured by ROA, ROE, and NPM. Cost efficiency, income diversification, and loan growth have been used as control variables had a significant impact on profitability except for loan growth had no impact.},
 year = {2022}
}

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TY  - JOUR
T1  - The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy
AU  - Khaled Zedan Zedan
Y1  - 2022/07/20
PY  - 2022
N1  - https://doi.org/10.11648/j.ijafrm.20220703.12
DO  - 10.11648/j.ijafrm.20220703.12
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 99
EP  - 107
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20220703.12
AB  - In this ever-changing competitive environment, the banking business, compared to other types of business, is ultimately exposed to risks. Banks now days are operating in a rapidly innovative industry with a lot of profit pressure that encourage them to create more and more value-added services to offer and better satisfy the customers. The Palestinian banking system operate in a risky, complex, changeable economic and political environment, bank managements should be aware of these circumstances. This study attempts to examine the impact of credit risk, liquidity, capital, and market structure on banks' profitability in a developing economy (Palestine) over eleven years (2010 - 2020). A dynamic panel analysis is applied to the sample of 12 banks with three econometric models representing profitability indicators employed by the study. In addition to the linear regression models, we used a Generalized Method of Moments (GMM) estimator. The results revealed that credit risk, liquidity, capital, and market structure impact bank profitability measured by ROA, ROE, and NPM. Cost efficiency, income diversification, and loan growth have been used as control variables had a significant impact on profitability except for loan growth had no impact.
VL  - 7
IS  - 3
ER  -

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Author Information

Khaled Zedan Zedan

Finance and Banking Department, Faculty of Economics and Social Studies, An-Najah National University, Nablus, Palestine

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APA Style

Khaled Zedan Zedan. (2022). The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy. International Journal of Accounting, Finance and Risk Management, 7(3), 99-107. https://doi.org/10.11648/j.ijafrm.20220703.12

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ACS Style

Khaled Zedan Zedan. The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy. Int. J. Account. Finance Risk Manag. 2022, 7(3), 99-107. doi: 10.11648/j.ijafrm.20220703.12

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AMA Style

Khaled Zedan Zedan. The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy. Int J Account Finance Risk Manag. 2022;7(3):99-107. doi: 10.11648/j.ijafrm.20220703.12

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@article{10.11648/j.ijafrm.20220703.12,
  author = {Khaled Zedan Zedan},
  title = {The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {7},
  number = {3},
  pages = {99-107},
  doi = {10.11648/j.ijafrm.20220703.12},
  url = {https://doi.org/10.11648/j.ijafrm.20220703.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20220703.12},
  abstract = {In this ever-changing competitive environment, the banking business, compared to other types of business, is ultimately exposed to risks. Banks now days are operating in a rapidly innovative industry with a lot of profit pressure that encourage them to create more and more value-added services to offer and better satisfy the customers. The Palestinian banking system operate in a risky, complex, changeable economic and political environment, bank managements should be aware of these circumstances. This study attempts to examine the impact of credit risk, liquidity, capital, and market structure on banks' profitability in a developing economy (Palestine) over eleven years (2010 - 2020). A dynamic panel analysis is applied to the sample of 12 banks with three econometric models representing profitability indicators employed by the study. In addition to the linear regression models, we used a Generalized Method of Moments (GMM) estimator. The results revealed that credit risk, liquidity, capital, and market structure impact bank profitability measured by ROA, ROE, and NPM. Cost efficiency, income diversification, and loan growth have been used as control variables had a significant impact on profitability except for loan growth had no impact.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - The Impact of Credit Risk, Liquidity, Capital, and Market Structure on Bank Profitability: Evidence from a Developing Economy
AU  - Khaled Zedan Zedan
Y1  - 2022/07/20
PY  - 2022
N1  - https://doi.org/10.11648/j.ijafrm.20220703.12
DO  - 10.11648/j.ijafrm.20220703.12
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 99
EP  - 107
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20220703.12
AB  - In this ever-changing competitive environment, the banking business, compared to other types of business, is ultimately exposed to risks. Banks now days are operating in a rapidly innovative industry with a lot of profit pressure that encourage them to create more and more value-added services to offer and better satisfy the customers. The Palestinian banking system operate in a risky, complex, changeable economic and political environment, bank managements should be aware of these circumstances. This study attempts to examine the impact of credit risk, liquidity, capital, and market structure on banks' profitability in a developing economy (Palestine) over eleven years (2010 - 2020). A dynamic panel analysis is applied to the sample of 12 banks with three econometric models representing profitability indicators employed by the study. In addition to the linear regression models, we used a Generalized Method of Moments (GMM) estimator. The results revealed that credit risk, liquidity, capital, and market structure impact bank profitability measured by ROA, ROE, and NPM. Cost efficiency, income diversification, and loan growth have been used as control variables had a significant impact on profitability except for loan growth had no impact.
VL  - 7
IS  - 3
ER  -

Copy | Download