Determinants of a Bank's Performance in Emerging Markets: Evidence from Egypt

Abstract

The study investigated determinants of bank's performance in emerging markets, through an analysis of the Egyptian banking industry. According to a quantitative analysis of 12 banks during the period from 2000 to 2019, without 2020 based on the impact of the COVID-19 Pandemic on bank's performance based on cross-sectional analysis, despite the fact that many studies have observed the impact of macroeconomic variables on bank's performance, these studies did not consider other variables as a determinant of bank's performance. As a result, the impact of the bank's regulatory variables and the bank's operations variables, in addition to the bank's maturity, size, style, and ownership as control variables on this performance was investigated in this study. The study found that the most significant determinants of a bank's performance included economic growth rate, interest rate and dollarization as economic variables. Required reserve ratio and capital adequacy requirements as bank's regulations variables. Nonperforming loans ratio, loan to deposit ratio, environmental and social activities as bank's operations variables. Ownership, maturity and style as bank's characteristics. But the other determinants within study have insignificant effect on bank performance included bank efficiency, equity to assets ratio; governance activity and size of a bank; that back to restructuring of banking industry, banking industry concentration, insufficiency of financial inclusion, and informal economic weight in Egypt.

Keywords: Bank's performance, Banking Industry, Macroeconomic, bank's regulations, bank's operations, bank's characteristics, Egypt

JEL Classification: E4; G21; G28