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In this paper, the author aims to examine the effect of perceived level of corruption on bank profitability.

The analysis is based on a balanced panel of ten commercial banks in Tunisia over the period 2003-2014. The author uses the generalized method of moments estimator technique described by Arellano and Bover (1995).

The author finds a positive relationship between the bank profitability and the corruption level. This surprising result suggests that Tunisian commercial banks take advantage from the high level of corruption. Regarding the others determinants, the findings reveal that bank profitability is positively related to capitalization level and liquidity. By contrast, a low asset quality is associated with low profitability.

The novelty of this study consists in the inclusion of the corruption level as a determinant of bank profitability.

This paper aims to conduct a comparative study on the impact of income diversification and the main non-interest components on banks’ financial performance and risk-adjusted profitability in China and Egypt.

This study uses both static and dynamic panel regression analyses on a sample of Egyptian and Chinese banks from 2009 to 2022.

Income diversification yields positive effects on bank profitability in Egypt and China. Trading income consistently exhibits a significant positive influence on bank profitability in both nations. Conversely, fee-based income positively impacts bank profitability in China, whereas in Egypt, this effect is observed under dynamic-based regression models. On the contrary, income diversification does not consistently increase risk-adjusted profitability in both countries, especially Egypt.

To the best of the authors’ knowledge, this is the first study to examine the impact of income diversification on Egyptian bank performance while identifying the most significant non-interest income components. In addition, the comparative analysis conducted in this study reveals the positioning of China, the largest economy among emerging countries, in terms of the degree of income diversification, its impact on bank profitability and the extent to which non-interest income components contribute to bank profitability when compared with Egypt, representing an emerging country characterised by different levels of bank market power, financial infrastructure and expertise. Findings hold significant implications, suggesting that bank managers and policymakers should prioritise diversifying income sources, particularly through fee-based services and trading activities in China, and trading activities in Egypt, to enhance financial profitability.

After half a decade of balance sheet clean-up prompted by the Reserve Bank of India’s (RBI) asset quality review (AQR), Indian banks are back on track for increased loan growth. Being a financial vehicle for the economy, loan growth cannot be put on hold for a long period of time. But it is also important to understand that loan growth carries an inherent risk of default. A trade-off exists between loan growth, non-performing loans (NPLs) and bank profitability. Our study highlights the importance of understanding this relationship.

For our study, we have taken a sample of India’s private and public sector banks. The dataset consists of the financials of our sample for the period 2006–2021. Two-step differenced generalized method of moments (SYS-GMM) estimation has been used to establish the relationship. The mediating role of NPLs in the relationship between loan growth and profitability is examined by the mediation analysis using structural equation modeling (SEM) and the Sobel test. We have used Stata 16.1 for the analysis of our dataset.

The findings of our study suggest that bank lending is a major contributor to the bank’s earnings. Loan growth after a certain point has a negative impact on profitability, and it also adds to the NPLs of the bank. The study result indicates that moderate loan growth is key to steady and stable growth in the Indian banking industry.

Our study is directed toward understanding the positive and negative manifestations of loan growth. We develop a framework to understand this relationship and then empirically prove it. The study is beneficial for employees and policymakers alike to minimize the negative impact of loan growth.

The issue of the simultaneous impact of loan growth on NPLs and profitability has not been studied in the Indian banking sector. Also, this study adds to the present literature by studying the mediation effect of the NPLs on the loan growth and profitability relationship.

This paper examines how the determinants of bank performance and profitability were affected by the recent systemic banking crisis. We explore the contemporaneous determinants of U.S. regional banks’ performance and profitability before, during, and after the crisis years.

We analyze the determinants of three measures of profitability: return on assets, return on equity, and net interest margins.

We found evidence of lowered bank profitability, credit quality, and scale of lending activities well after the defined crisis period. This coincides with historical evidence that downturns associated with a financial crisis are more severe than downturns due to short-run fluctuations in the business cycle. Banks responded to the crisis by increasing their equity and liquidity levels.

This paper is the first to compare the determinants of bank profitability during the precrisis, crisis, and postcrisis periods. Our study extends previous work by using data from U.S. banks, adding coverage of the years since the banking crisis ended, and considering profitability determinants not previously explored in studies on the effects of the crisis.

Introduction: Commercial banks play a vital role in the global economy, facilitating economic growth and providing essential financial services. As key intermediaries between savers and borrowers, these institutions operate in a dynamic and complex environment characterised by various risk factors that can significantly impact their profitability and overall stability. Understanding the interconnected relationships between credit risk, interest rate risk, liquidity risk, and profitability is crucial for effective risk management strategies and the development of appropriate regulatory frameworks.

Purpose: Commercial banks play a critical role in the global economy by facilitating economic growth and providing financial services. This study examines the interconnected relationships between credit risk, interest rate risk, liquidity risk, and profitability in commercial banking.

Methodology: The sample consists of licenced scheduled commercial banks on the Bombay Stock Exchange (BSE) from 2015 to 2022. Using the Smart PLS-SEM 3.0 path analysis technique, the study evaluates the combined influence of these risk factors on profitability and provides evidence-based recommendations for risk management strategies.

Findings: The findings can assist banks in enhancing their risk management practices, and regulators in developing appropriate regulatory frameworks. By understanding the key risk factors and their impact on profitability, banks and regulators can mitigate risks, enhance transparency, and promote stability within the banking sector.

Significance/value: The value of this study lies in its focus on the interconnectedness of risk factors, profitability, and the potential implications for decision-making, risk management strategies, regulatory frameworks, and the overall stability of the commercial banking sector.

This paper examines the profitability and performance measurement of U.S. regional banks during the period 1994–2011, using the GMM estimator technique. Our study extends prior research by including several factors not previously considered using U.S. data.

We use bank-specific, industry-specific, and macroeconomic determinants of profitability contemporaneous with our performance indicators. We follow the accounting fundamental analysis path in explaining the bank performance.

Among the performance measures, the efficiency ratio and provisions for credit losses are negatively and equity scaled by assets is positively related to profitability. However, these relationships either reverse (efficiency ratio and provisions for credit losses) or become insignificant (equity scaled by assets) when the target becomes change in profitability. The level of nonperforming assets is negatively related to profitability across all measures of profitability used. Macroeconomic variables are largely unrelated to profitability during the year they are measured. However, they have a significant relationship with earnings change measures, suggesting they have a lagged effect on profitability. The slope of the yield curve is especially strong in this regard.

We use our determinants to model changes in bank profitability one year ahead, in addition to including several factors not previously considered, using the predictive focus of the fundamental analysis research.

There is a global concern over climate change issues. The banking sector is expected to join the initiatives in solving environmental issues, even though banking sectors have no direct contribution to environmental damage. Banking commitment to environmental issues is required. The banking sector should have a responsibility for monitoring and managing the impacts of the ecological effects as the result of their business activities. The advantages of green banking implementation are that bank can avoid the use of paper by utilizing online transaction for their daily operation such as internet banking, SMS banking, and ATM. This will bring in the paperless operation into the banks, which in turn will reduce the logging of the forest. Banks also can develop an environmentally friendly lending policy for their business activities. This research aims to determine the impact of green banking daily operation, green banking policy (GBP), capital adequacy, non-performing loan (NPL), bank efficiency, and bank liquidity on bank profitability. The sample of this research is the Indonesian banking sector during the period 2012–2016. The results showed that green banking daily operation, capital adequacy, and bank liquidity have a positive effect on bank profitability. GBP and bank efficiency negatively affect bank profitability, while the NPL did not have a significant impact on banks’ profitability.

The collapse of Italian economy has coincided with the global financial crisis to which derivatives are suspected to be responsible of its propagation. For this reason, this study aims to examine whether the use of derivatives affects the profitability of Italian banks during both the global financial crisis period and the recession period of Italian economy. To reach this goal an appropriate econometric procedure namely the dynamic Generalized Method of Moments system is applied using data from 22 Italian banks over the long period 2005–2017. A series of bank-specific indicators are used to explain the effect of overall derivatives and each derivative instrument separately on Italian banks’ profitability. The results of regressions panels indicate that in general derivatives as well as measured in the whole or splitting up in instruments specifically in forwards, options, and, in particular, swaps affect positively the profitability of Italian banks. The main conclusion is that – despite the episode of economic recession in Italy – Italian banks boost their profitability by using derivatives.

As practical contribution, policy-makers in Italy should throw out the assumption of the implication of derivatives in the fragility of the banking system. On the contrary, they should pave the way easily for Italian banks’ managers to deal with derivatives and look out for the real problems of the recent collapse of the Italian economy.

This study aims to investigate the impact of liquidity creation (LC) on the profitability and stability of banks while considering the moderating role of corruption.

Panel data from 23 conventional banks and five Islamic banks in Pakistan spanning from 2008 to 2021 were used for analysis. The study used fixed effect and random effect models, along with the generalized method of moments estimation to ensure robustness of the results.

The study reveals a negative relationship between LC and banking profitability, but a positive association with banking stability. Additionally, corruption is found to play a moderating role in the relationship between LC, profitability and stability in the banking sector of Pakistan.

The findings have practical implications for bank managers and investors, emphasizing the negative relationship between LC and profitability in Pakistan. Moreover, the study highlights the significant impact of corruption on bank performance, which can guide policymakers in formulating strategies to strengthen the banking sector and prevent financial turmoil in the future.

This study makes a significant contribution to the existing literature by examining the moderating role of corruption in the relationship between LC, profitability and stability in both conventional and Islamic banks.

This paper aims to contribute to the political connection literature by investigating the impact of political connection on banks’ profitability in Bahrain.

Exploiting the unique natural experiment of the 2017 Qatar blockade crisis, this study uses primary data of political connection. The study uses the difference-in-difference (DID) methodology to investigate the effect of political connections on banks’ profitability.

The main finding is that political connections have a positive effect on bank profitability in Bahrain. The paper finds that the ongoing GCC crisis has had a negative effect on the banking sector of Bahrain. During the Qatar blockade crisis, politically connected banks suffered more than their non-connected counterparts.

The result suggests that the Qatar blockade crisis has had a notable effect on the banking system throughout the region, including both the boycotting countries as well as Qatar. In the banking sector, politically connected banks are the most harmed by the crisis. Investors can enhance their hedging and investment decisions by exploiting knowledge of how political connections affected bank profitability during the Qatar diplomatic crisis and how that effect can be transmitted from one market to another. In addition, regulators could use insights about the association between political connections and profitability in Bahrain to undertake strategies to increase banks’ profitability and mitigate the transmission effect of a crisis by ensuring adequate regulation and supervision.

This paper offers four novel contributions to political connection literature as follows: Firstly, the study fills in an important gap in the literature as it is the first attempt to quantify the impact of political connections on bank performance in Bahrain. To the best of the authors’ knowledge, the role of political factors in Bahrain has not been studied about the banking system. Secondly, the study depends on primary data about political connections collected manually from various sources. Thirdly, this is the first study to investigate the effect of the Qatar blockade on the banking sector. Lastly, the evidence suggests that politically connected banks are more profitable than banks that lack political connections. However, the Qatar blockade crisis resulted in a sharp decrease in bank profitability, suggesting that the crisis significantly harmed the banking sector in Bahrain.