Bank profitability determinants in Africa: A review of literature

Ozili, Peterson K (2024): Bank profitability determinants in Africa: A review of literature. Forthcoming in:

Abstract

The study presents a review of existing research on bank profitability determinants in Africa. Using the literature review methodology, it was found that bank profitability determinants differ across countries in all regions of Africa. Some suggested areas for future research are to explore the impact of circular economy, fintech activities, the pandemic, and economic uncertainty on the profitability of African banks. The implication of the review findings is that bank profitability determinants will remain a contested research agenda in the banking literature.

• Item Type: MPRA Paper
• Language: English
• Keywords: African banks, profitability determinants, banks, bank profitability, Europe, Africa, regulation
• Subjects: G - Financial Economics > G0 - General > G00 - General; G - Financial Economics > G2 - Financial Institutions and Services > G20 - General; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation

References

Abdullah, N., and Tan, Y. (2017). Profitability of commercial banks revisited: new evidence from oil and non-oil exporting countries in the MENA region. Investment Management and Financial Innovations, 14, 3, 62-73.

Abel, S., & Le Roux, P. (2016). Determinants of banking sector profitability in Zimbabwe. International Journal of Economics and Financial Issues, 6(3).

Adelopo, I., Lloydking, R., & Tauringana, V. (2018). Determinants of bank profitability before, during, and after the financial crisis. International Journal of Managerial Finance, 14(4), 378-398.

Aebi, V., Sabato, G., & Schmid, M. (2012). Risk management, corporate governance, and bank performance in the financial crisis. Journal of Banking & Finance, 36(12), 3213-3226.

Albertazzi, U., Gambacorta, L. (2009). Bank profitability and the business cycle. Journal of financial stability, 5(4), 393-409.

Alhassan, A. L., Tetteh, M. L., & Brobbey, F. O. (2016). Market power, efficiency and bank profitability: evidence from Ghana. Economic Change and Restructuring, 49(1), 71-93.

Ali, M., & Puah, C. H. (2019). The internal determinants of bank profitability and stability. Management Research Review.

Amin, M. A. M., Sanusi, N. A., Kusairi, S., & Abdallah, Z. M. (2019). Inverse relationship of financial risk and performance in commercial banks in Tanzania. Innovations, 11, 4-1.

Ammar, N., & Boughrara, A. (2019). The impact of revenue diversification on bank profitability and risk: evidence from MENA banking industry. Macroeconomics and Finance in Emerging Market Economies, 12(1), 36-70.

Bitar, M., Saad, W., & Benlemlih, M. (2016). Bank risk and performance in the MENA region: The importance of capital requirements. Economic Systems, 40(3), 398-421.

Boadi, I., Dana, L. P., Mertens, G., & Mensah, L. (2017). SMEs’ financing and banks’ profitability: a “good date” for banks in Ghana? Journal of African Business, 18(2), 257-277.

Chidozie, U. E., & Ayadi, F. S. (2017). Macroeconomy and banks’ profitability in Nigeria. African Research Review, 11(2), 121-137.

Cao, Y. (2022). Bank earnings management and performance reporting of comprehensive income. Journal of Accounting and Public Policy, 41(5), 106996.

Cohen, L. J., Cornett, M. M., Marcus, A. J., & Tehranian, H. (2014). Bank earnings management and tail risk during the financial crisis. Journal of Money, Credit and Banking, 46(1), 171-197.

Danisman, G. O., Demir, E., & Ozili, P. (2021). Loan loss provisioning of US banks: Economic policy uncertainty and discretionary behavior. International Review of Economics & Finance, 71, 923-935.

Dietrich, A., Wanzenried, G. (2011). Determinants of bank profitability before and during the crisis: evidence from Switzerland. Journal of international financial markets, institutions and money, 21(3),307-327.

Du Toit, E., & Cuba, Y. Z. (2018). Cost and profit efficiency of listed South African banks pre and post the financial crisis. Research in International Business and Finance, 45, 435-445.

Elkhayat, N., & ElBannan, M. A. (2018). State Divestitures and Bank Performance: Empirical Evidence from the Middle East and North Africa Region. Asian Economic and Financial Review, 8(2), 145.

Ertan, A. (2022). Real earnings management through syndicated lending. Review of Accounting Studies, 27(4), 1157-1198.

Francis, M.E. (2013). Determinants of commercial bank profitability in Sub-Saharan Africa. International Journal of Economics and Finance, 5(9), 134-147.

Garcia, M. T. M., & Trindade, M. J. (2019). Determinants of banks’ profitability in Angola. African Journal of Economic and Management Studies, 10(1), 116-128.

Ghosh, S. (2016). Political transition and bank performance: how important was the Arab Spring? Journal of Comparative Economics, 44(2), 372-382.

Kapur, D., & Gualu, A. K. (2012). Financial performance and ownership structure of Ethiopian commercial banks. Journal of Economics and International Finance, 4(1), 1-8.