- Home
- Publications
- Econometric Analysis Of The Determinants Of Bank Profitability In Three Major African Counties: Kenya, Nigeria And South Africa
Econometric Analysis of the Determinants of Bank Profitability in Three Major African Counties
In light of the importance of bank profitability for provision of financial services and for financial stability, this study examines its determinants in three major sub-Saharan African countries, namely Kenya, Nigeria and South Africa.
Authors
External Authors
Ridwa Ali Abdilahi
Related Themes
Productivity, Trade, and Regional EconomiesJEL Code
C01, C13, C23, C51
Paper Category Number
536
Our panel econometric approach, using bank-level fixed effects, seeks to identify the bank-specific, banking-market and macroeconomic determinants of bank profitability in 240 banks across the three countries over 1990-2019. Across a range of estimates, we find that bank liquidity and the non-interest income to total income ratio had a significant positive effect on profitability while credit risk and the cost-to-income ratio had a significant negative effect. In most models, real GDP growth affected bank profitability positively. Small banks and large banks differ in terms of their determinants of profitability. There are important implications for both bank management and regulators, which in turn may affect both financial stability and scope for economic development.
Related Blog Posts
Productivity, Living Standards and Wellbeing: Comparing the UK and Australia
Eliza da Silva Gomes
Adrian Pabst
29 Apr 2024
4 min read
Exploring the Data on UK Productivity Performance
Issam Samiri
Stephen Millard
11 Dec 2023
4 min read
UK Investment Past and Prospects: A Framework for Analysis
Catherine Mann
01 Dec 2023
6 min read
Related Projects
Related News
Related Publications
Examining Rising Inactivity and NHS Waiting Times
09 May 2024
UK Economic Outlook Box Analysis
UK Business Investment: Economists, Managers, Financiers
25 Apr 2024
UK Productivity Commission