Profitability determinants of banks in the countries with low interest rates
Abstract
The purpose of this study is to observe the effects of bank-specific and macroeconomic variables on the financial performance of conventional banks operating in new classified countries (countries with negative interest rates) over the period of 1997-2017.
Methodology. In order to empirically investigate profitability determinants, we employed OLS method (FGLS panel-data model).
The originality / value of the research is empirical research on determinants of profitability in the new classification of countries: countries with lowest interest rates in the world.
The findings show that bank specific and macroeconomic variables are very crucial in explaining the profitability. For example, capital adequacy negatively affects NIM which means that higher bank capital to total asset ratio may lead to decrease of net interest margin. Similarly, bank efficiency ratio is negatively related to NIM meaning that higher costs negatively influence to profitability of bank.
About the Authors
A. Faizulayev
KIMEP University
Kazakhstan
Kazakhstan
Faizulayev Alimshan - Assistant Professor in Acc & Fin of Bang College of Business (BCB), KIMEP University.
Almaty.
A. Bazarbayeva
KIMEP University
Kazakhstan
Kazakhstan
Bazarbayeva Aliya - Masters in Bang College of Business (BCB), KIMEP University.
Almaty.
A. Sailau
KIMEP University
Kazakhstan
Kazakhstan
Sailau Akzhan - Masters in Bang College of Business (BCB), KIMEP University.
Almaty.
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Review
For citations:
Faizulayev A., Bazarbayeva A., Sailau A. Profitability determinants of banks in the countries with low interest rates. Central Asian Economic Review. 2020;(6):58-71.
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