Banks Specific Factor that Determinate the Profitability of Commercial Banks in Republic of North Macedonia
Keywords:
Bank Profitability, the profitability determinants, commercial banks, ROA.Abstract
Banking sector plays an important role in economy and has significant impact on country’s economic
growth. The purpose of this seminar paper is by utilizing empirically analyses to identify the key
determinants of commercial banks’ profitability by case study, Republic of North Macedonia.
Performance evaluation of commercial banks is grounded on the banks specific factors, exploiting data
for the period 2012 -2018 for 13 commercial banks. For this purpose, the return on assets (ROA) is taken
as a dependent variable, whereas capital adequacy (CAP), bank size (SIZE), credit risk (CR), revenue
diversification (DIV), liquidity (L) and leverage (LEV) represent the independent variables. The
regression analysis indicate that that commercial banks profitability in Republic of North Macedonia has
been driven mainly by factors such as liquidity and size.
References
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profitability: Evidence for some EU countries. Paper presented at Pan-European Conference
Jointly Organized by the IEFS-UK & University of Macedonia Economic & Social Sciences,
Thessaloniki, Greece, May 17–20; pp. 17–20.
Ahmad, Rubi, EricH. Y. Koh, and Shahrin Saaid Shaharuddin. (2016). Determinants of bank
profitability: A comparative study of East Asia and Latin America. International Journal of
Banking, Accounting and Finance 7: 34–51.
Albertazzi, Ugo, Alessandro Notarpietro, and Stefano Siviero. (2016).An Inquiry into the
Determinants of the Profitabilityof Italian Banks (No. 364). Rome: Bank of Italy, Economic
Research and International Relations Area.
Angoff, J., & Brown, R. (2007). An Analysis of the Profitability and Performance of the
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Macroeconomic Determinants of Bank Profitability', Bank of Greece Working Paper,Greece.
Athanasoglou, P., Brissimis, S. & Delis, M. (2008). Bank-specific, industry-specific and
macroeconomic determinants of bank profitability, Journal of International Financial Markets,
Institutions and Money, 18(2), pp. 121-136.
Ben Naceur, Sami, and Mohammed Omran. (2011).The effects of bank regulations, competition,
and financial reforms on banks’ performance”, Emerging Markets Review, Vol.12, pp.1-20.
Chen, R., & Wong, K., (2004). The determinants of financial health of Asian insurance
companies. The Journal of Risk and Insurance, Vol. 71, No. 3.
Chiorazzo, V., Milani, C., Salvini, F., (2008). Income diversification and bank performance:
Evidence from Italian banks. Journal of Financial Services Research 33, 181-203.
Demirgüç-Kunt, Asli, and Harry Huizinga. (1999). Determinants of commercial bank interest
margins and profitability: Some international evidence. The World Bank Economic Review 13:
379–408.
Deng, Angela. (2016). Determinants and Differences of Domestic and Foreign Commercial
Bank Profitability. Master thesis, University of New Hampshire, Durham, NH, USA.
Dietrich, Andreas, and Gabrielle Wanzenried (2011). Determinants of bank profitability before
and during the crisis: Evidence from Switzerland, Journal of International Financial Markets,
Institutions and Money, Vol.21, pp.307-327.
Dietrich, Andreas, and Gabrielle Wanzenried, (2014). The determinants of commercial banking
profitability in low-, middle-, and high-income countries, The Quarterly Review of Economics
and Finance, forthcoming.
Djalilov, Khurshid, and Jenifer Piesse. (2016). Determinants of bank profitability in transition
countries: What matters most? Research in International Business and Finance 38: 69–82.
Elsas, R., Hackethal, A., Holzhäuser, M., (2010). The anatomy of bank diversification , Journal
of Banking and Finance 34, 1274–1287.
Ezra, M (2013).Determinants of Commercial Bank Profitability in Sub-Saharan Africa,
International Journal of Economics and Finance,vol.5.
Flamini, Valentina, Calvin McDonald, and Liliana Schumacher, (2009).The determinants of
commercial bank profitability in Sub-Saharan Africa, International Monetary Fund, Working
Paper.
Goddard, J., Molyneux, P., Wilson, J., (2004) .Dynamics of Growth and Profitability in Banking,
Journal of Money, Credit and Banking 36(3),1069-1090.
Haslem, J.A., (1968). A statistical analysis of\the relative profitability of commercial banks,
Journal of Finance 23, 167-176.
Hassan, M.K., Bashir, A., (2003). Determinants of Islamic Banking Profitability,Paper Presented
at the Proceedings of the Economic Research Forum 10th Annual Conference, Marakesh-
Morocco.
Hifza Malik, (2011) .Determinants of Insurance Companies Profitability: An Analysis of
Insurance Sector Of Pakistan, Academic Research International, Volume 1, Issue 3.
Kosmidou, K., (2008). The Determinants of Banks' Profits in Greece during the Period of EU
Financial Integration,Managerial Finance, 34(3).
Lee, Chien-Chiang, Yang, Shih-Jui, and Chang Chi-Hung,(2014).Non-interest income,
profitability, and risk in banking industry: A cross-country analysis, North American Journal of
Economics and Finance, Vol.27, pp.48-67.
Levine, R., Loayza, N. (2000). Financial intermediation and growth: Causality and causes.
Journal of Monetary Economics.
Menicucci, Elisa, and Guido Paolucci. (2016) .The determinants of bank profitability: Empirical
evidence from European banking sector,Journal of Financial Reporting and Accounting 14:
1–23.
Micco, Alejandro, Ugo Panizza, and Monica Yañez.,(2007) .Bank ownership and performance.
Does politics matter? , Journal of Banking and Finance, Vol.31, pp.219-241.
Molyneux, P., Thornton, J., (1992). Determinants of European bank profitability: A note, Journal
of Banking and Finance 16, 1173-1178.
Nassreddine, G, Fatman, Sand Anis, J (20l3). Determinants of Banks performance. Viewing Test
by Cognitive Mapping Technique, A case of Biat', International Review of Management and
Business Research, VoI.2, Issue.l
Ongore, V.O., &Kusa, G.B. (2013).Determinants of financial performance of commercial banks
in Kenya,International Journal of Economics and Financial Issues.
Ozili, Peterson K. (2016). Bank Profitability and Capital Regulation: Evidence from Listed and
non-Listed Banks in Africa,Journal of African Business 1–26.
Petria, Nicolae, Bogdan Capraru, and Iulian Ihnatov.,(2015).Determinants of banks’
profitability: Evidence from EU 27 banking systems,Procedia Economics and Finance 20:
518–24.
Poposka K., Stojanovska M., and Iloska-Trajkovska I., (2017) .Banking from different angle,
contemporary topics-from theory to practice. Magor,
Poposka K., Trpkovski M.(2016). Bank Profitability prior and after the Crisis: Evidence from
the selected Transitional Economies, Economic Development,Journal of the Institute of
Economics, No. 1-2.
Poposka K., Trpkovski M.,Secondary., (2013) .Model for Bank Profitability-Test on The case of
Macedonian Banking sector, Research Journal of Finance and Accounting, Vol 4. No 6.
Staikouras, Christos, and Geoffrey E. Wood.,(2004) .The Determinants of European Banks
Profitability, International Business and Economics Research Journal, Vol.3, No.6, pp.57-69.
Tan, Aoran Yong, Christos Floros, and John R. Anchor. (2016). The Profitability of Chinese
banks: Impacts of risk,competition and efficiency,Review of Accounting and Finance.
Valentina Flaminin. Et.Al,. (2009). Determinants of Commercial Bank Profitability in Sub-
Saharan Africa, International Monitory Fund (IMF) Working Paper, Wp/09/15.
Yuqi Li (2007) .Determinants of Banks‟ Profitability and Its Implication on Risk Management
Practices: Panel Evidence from the UK, the University of Nottingham.
profitability: Evidence for some EU countries. Paper presented at Pan-European Conference
Jointly Organized by the IEFS-UK & University of Macedonia Economic & Social Sciences,
Thessaloniki, Greece, May 17–20; pp. 17–20.
Ahmad, Rubi, EricH. Y. Koh, and Shahrin Saaid Shaharuddin. (2016). Determinants of bank
profitability: A comparative study of East Asia and Latin America. International Journal of
Banking, Accounting and Finance 7: 34–51.
Albertazzi, Ugo, Alessandro Notarpietro, and Stefano Siviero. (2016).An Inquiry into the
Determinants of the Profitabilityof Italian Banks (No. 364). Rome: Bank of Italy, Economic
Research and International Relations Area.
Angoff, J., & Brown, R. (2007). An Analysis of the Profitability and Performance of the
Michigan Auto Insurance Market. Michigan Auto Law.
Athanasoglou, P, Brissimis, S and Delis,M, (2006), 'Bank-specific, Industry-specific and
Macroeconomic Determinants of Bank Profitability', Bank of Greece Working Paper,Greece.
Athanasoglou, P., Brissimis, S. & Delis, M. (2008). Bank-specific, industry-specific and
macroeconomic determinants of bank profitability, Journal of International Financial Markets,
Institutions and Money, 18(2), pp. 121-136.
Ben Naceur, Sami, and Mohammed Omran. (2011).The effects of bank regulations, competition,
and financial reforms on banks’ performance”, Emerging Markets Review, Vol.12, pp.1-20.
Chen, R., & Wong, K., (2004). The determinants of financial health of Asian insurance
companies. The Journal of Risk and Insurance, Vol. 71, No. 3.
Chiorazzo, V., Milani, C., Salvini, F., (2008). Income diversification and bank performance:
Evidence from Italian banks. Journal of Financial Services Research 33, 181-203.
Demirgüç-Kunt, Asli, and Harry Huizinga. (1999). Determinants of commercial bank interest
margins and profitability: Some international evidence. The World Bank Economic Review 13:
379–408.
Deng, Angela. (2016). Determinants and Differences of Domestic and Foreign Commercial
Bank Profitability. Master thesis, University of New Hampshire, Durham, NH, USA.
Dietrich, Andreas, and Gabrielle Wanzenried (2011). Determinants of bank profitability before
and during the crisis: Evidence from Switzerland, Journal of International Financial Markets,
Institutions and Money, Vol.21, pp.307-327.
Dietrich, Andreas, and Gabrielle Wanzenried, (2014). The determinants of commercial banking
profitability in low-, middle-, and high-income countries, The Quarterly Review of Economics
and Finance, forthcoming.
Djalilov, Khurshid, and Jenifer Piesse. (2016). Determinants of bank profitability in transition
countries: What matters most? Research in International Business and Finance 38: 69–82.
Elsas, R., Hackethal, A., Holzhäuser, M., (2010). The anatomy of bank diversification , Journal
of Banking and Finance 34, 1274–1287.
Ezra, M (2013).Determinants of Commercial Bank Profitability in Sub-Saharan Africa,
International Journal of Economics and Finance,vol.5.
Flamini, Valentina, Calvin McDonald, and Liliana Schumacher, (2009).The determinants of
commercial bank profitability in Sub-Saharan Africa, International Monetary Fund, Working
Paper.
Goddard, J., Molyneux, P., Wilson, J., (2004) .Dynamics of Growth and Profitability in Banking,
Journal of Money, Credit and Banking 36(3),1069-1090.
Haslem, J.A., (1968). A statistical analysis of\the relative profitability of commercial banks,
Journal of Finance 23, 167-176.
Hassan, M.K., Bashir, A., (2003). Determinants of Islamic Banking Profitability,Paper Presented
at the Proceedings of the Economic Research Forum 10th Annual Conference, Marakesh-
Morocco.
Hifza Malik, (2011) .Determinants of Insurance Companies Profitability: An Analysis of
Insurance Sector Of Pakistan, Academic Research International, Volume 1, Issue 3.
Kosmidou, K., (2008). The Determinants of Banks' Profits in Greece during the Period of EU
Financial Integration,Managerial Finance, 34(3).
Lee, Chien-Chiang, Yang, Shih-Jui, and Chang Chi-Hung,(2014).Non-interest income,
profitability, and risk in banking industry: A cross-country analysis, North American Journal of
Economics and Finance, Vol.27, pp.48-67.
Levine, R., Loayza, N. (2000). Financial intermediation and growth: Causality and causes.
Journal of Monetary Economics.
Menicucci, Elisa, and Guido Paolucci. (2016) .The determinants of bank profitability: Empirical
evidence from European banking sector,Journal of Financial Reporting and Accounting 14:
1–23.
Micco, Alejandro, Ugo Panizza, and Monica Yañez.,(2007) .Bank ownership and performance.
Does politics matter? , Journal of Banking and Finance, Vol.31, pp.219-241.
Molyneux, P., Thornton, J., (1992). Determinants of European bank profitability: A note, Journal
of Banking and Finance 16, 1173-1178.
Nassreddine, G, Fatman, Sand Anis, J (20l3). Determinants of Banks performance. Viewing Test
by Cognitive Mapping Technique, A case of Biat', International Review of Management and
Business Research, VoI.2, Issue.l
Ongore, V.O., &Kusa, G.B. (2013).Determinants of financial performance of commercial banks
in Kenya,International Journal of Economics and Financial Issues.
Ozili, Peterson K. (2016). Bank Profitability and Capital Regulation: Evidence from Listed and
non-Listed Banks in Africa,Journal of African Business 1–26.
Petria, Nicolae, Bogdan Capraru, and Iulian Ihnatov.,(2015).Determinants of banks’
profitability: Evidence from EU 27 banking systems,Procedia Economics and Finance 20:
518–24.
Poposka K., Stojanovska M., and Iloska-Trajkovska I., (2017) .Banking from different angle,
contemporary topics-from theory to practice. Magor,
Poposka K., Trpkovski M.(2016). Bank Profitability prior and after the Crisis: Evidence from
the selected Transitional Economies, Economic Development,Journal of the Institute of
Economics, No. 1-2.
Poposka K., Trpkovski M.,Secondary., (2013) .Model for Bank Profitability-Test on The case of
Macedonian Banking sector, Research Journal of Finance and Accounting, Vol 4. No 6.
Staikouras, Christos, and Geoffrey E. Wood.,(2004) .The Determinants of European Banks
Profitability, International Business and Economics Research Journal, Vol.3, No.6, pp.57-69.
Tan, Aoran Yong, Christos Floros, and John R. Anchor. (2016). The Profitability of Chinese
banks: Impacts of risk,competition and efficiency,Review of Accounting and Finance.
Valentina Flaminin. Et.Al,. (2009). Determinants of Commercial Bank Profitability in Sub-
Saharan Africa, International Monitory Fund (IMF) Working Paper, Wp/09/15.
Yuqi Li (2007) .Determinants of Banks‟ Profitability and Its Implication on Risk Management
Practices: Panel Evidence from the UK, the University of Nottingham.
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Published
2021-05-20
How to Cite
Kosumi, A., & Kosumi, A. (2021). Banks Specific Factor that Determinate the Profitability of Commercial Banks in Republic of North Macedonia: Array. Acta Universitatis Danubius. Œconomica, 17(3). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1025
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