An Empirical Analysis of Determinants of Bank Profitability from Listed UK Banks and its Implication on Risk Management Practice

Wu, Yang (2014) An Empirical Analysis of Determinants of Bank Profitability from Listed UK Banks and its Implication on Risk Management Practice. [Dissertation (University of Nottingham only)] (Unpublished)

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Abstract

This paper examines the determinants of bank profitability from 52 listed banks in UK for the period of 2004-2013. The financial ratios are employed to examine the effect of bank specific and macroeconomic factors on bank profitability. To evaluate the impact of the recent financial crisis, we split up the total period into before and during the crisis period (2004-2008), and post-crisis period (2009-2013). The persistence of profit confirm the dynamic system GMM model are applied on unbalanced panel data. The estimation results exhibit that bank capital, liquidity risk and bank size contribute to higher bank's profitability significantly in the anticipated way. However, higher credit risk are associated with lower asset quality and lower bank's profitability. Besides, we find that real GDP growth and real interest rate has a significant positive impact on bank profitability. Finally, our study reveals the importance of bank specific factors provide further implication on bank risk management with aim to indicate efficiently risk management in order to protect the long run interest of profit-making.

Key words: Banks’ Profitability; Bank Specific factors; Macroeconomic factors; GMM estimator

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 12 Nov 2014 10:03
Last Modified: 22 Oct 2016 14:06
URI: http://eprints.nottingham.ac.uk/id/eprint/27515

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