Open AccessBank-specific, Industry-specific and Macroeconomic Determinants of Banks Profitability: Empirical Evidence from Tanzania
Author(s) -
Saganga Kapaya,
Gwahula Raphael
Publication year - 2016
Publication title -
international finance and banking
Language(s) - English
Resource type - Journals
ISSN - 2374-2089
DOI - 10.5296/ifb.v3i2.9847
Subject(s) - return on assets , profitability index , net interest margin , capital adequacy ratio , return on equity , profit margin , loan , diversification (marketing strategy) , economics , credit risk , business , monetary economics , financial system , econometrics , finance , profit (economics) , marketing , microeconomics
The study analyzed effects of bank-specific, industry-specific and macroeconomic determinants on banks profitability. It used a maximum of 350 firm-years, from 52 banks from 1998 to 2010 in Tanzania. It did proxy profitability using return on asset (ROA), return on equity (ROE) and net interest margin (NIM). The static fixed effects regression model indicated that; credit facilities (CFA), capital adequacy (TEA), credit risk (CFR), diversification ratio (DIV), bank risk (BAR) and financial market development (MCAd) were significantly influencing ROA. The dynamic fixed effects regression model indicated that lagged ROA, TEA, loan losses provisions (PLT) and BAR, were significantly influencing ROA.