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Determinants of bank profitability before, during, and after the financial crisis

Ismail Adelopo (Department of Accounting Economics and Finance, University of the West of England, Bristol, UK)
Robert Lloydking (Digital Banking, Ecobank, Banjul, The Gambia)
Venancio Tauringana (Department of Accounting, Faculty of Business and Law,University of Southampton, Southampton, UK)

International Journal of Managerial Finance

ISSN: 1743-9132

Article publication date: 9 March 2018

Issue publication date: 9 July 2018

5582

Abstract

Purpose

The purpose of this paper is to report the results of an investigation into the relationship between bank-specific, macroeconomic factors and bank profitability before (1999-2006), during (2007-2009), and after (2010-2013) the financial crisis.

Design/methodology/approach

Using the Economic Community of West African States’ bank panel data from 1999 to 2013, the paper used fixed effect models. The panel model includes bank-specific determinants (size, cost management, and liquidity), industry level, and macroeconomic variables.

Findings

Panel data analyses results show that there is a significant relationship between bank-specific determinants (size, cost management, and liquidity) and bank profitability (ROA) before, during, and after the financial crisis. However, the relationships between other bank-specific (capital strength, credit risk, and market power), macroeconomic (gross domestic product and inflation) determinants are sensitive to both periods of analysis (before, during, and after financial crisis) and bank profitability measure used (ROA or NIM).

Originality/value

Overall, these results suggest that the financial crisis did not affect the relationships between some bank-specific determinants and bank profitability.

Keywords

Citation

Adelopo, I., Lloydking, R. and Tauringana, V. (2018), "Determinants of bank profitability before, during, and after the financial crisis", International Journal of Managerial Finance, Vol. 14 No. 4, pp. 378-398. https://doi.org/10.1108/IJMF-07-2017-0148

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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