How ever Some contemporary studies have challenged the acceptability of the positive relationship predicted between market concentration and profitability.
The degree of security exceeded the level maximizing net benefits. Higher anticipated non-repayment of the loans, measured by the loan loss provisions, reflects a lower credit quality of the loans.
Hence, the size-profitability relationship may expect to be non-linear. Decentralization of responsibilities to provinces may be limited only to those provinces or states which want or are capable of handling responsibility. In other words there is direct positive relation between efficient expense management i.
Accourding to Belayneh research conducted on the determinants of commercial banks profitability during the period — concluded that the size of all Ethiopian commercial banks which is measured by log of total asset is increased for the last 10 years.
SCP, in general, provides two main benefits to studies, which investigate the banks profit behavior. The different studies regarding bank size concluded mixed emperical results.
He showed that market concentration is not a signal of collusive behavior but rather the superior efficiency of the leading firms. An other research conducted by Flamini et al.
Therefore, researchers widely posit that the more capital a bank has, the more resistant it will be to failure. It first formalized by Mason in as a method of analyzing markets and firms Worthington et al.
Most literatures suggest that increased exposure to credit risk is obviously associated with decreased firm profitability Ommeren That is, the more cash a commercial bank has the greater is its capacity to make profits. In the case of Ethiopian commercial banks business environment regarding the impact of deposits on profitability research conducted by Belayeneh, concluded that, even though, deposit is the main source of funds for banks, the number one expense item for a banking sector is interest payment on saving and fixed deposits.
Schumacherauthor of the bestseller Small is Beautiful: The SCP was the central opinion of the Harvard school of thought and popularized during with its empirical work involving the identification of correlations between industry structure and profitability.
Decentralization promises to enhance efficiency through both inter-governmental competition with market features and fiscal discipline which assigns tax and expenditure authority to the lowest level of government possible. In addition to this, other study conducted by Belayneh examined the determinants of profitability at internal and external level.
Because of this, 24 study revealed fixed deposit has a negative and significant impact on Ethiopian commercial banks profitability. Financial reports within twelve years may affacted by different non modaled variables in the state of the economy. Hall review other works that detail these cycles, including works which analyze the concept of core elites which compete with state accumulation of wealth and how their "intra-ruling-class competition accounts for the rise and fall of states" and of their phases of centralization and decentralization.
As a result, this area is not effectively studied. Participation In decentralization the principle of subsidiarity is often invoked. They veriefied that there is a direct association between profitability of commercial banking industries and its both internal and external deteminants eg.
On the other hand, idle funds and the lower returns on liquid assets may also adversely affect the profitability of those institutions with surplus liquidity. However, bank size, expense management and credit risk affect the commercial banks profitability significantly and negatively.
Because countries differ each other by their economic systems, financial systems, political systems and operating environments. Regarding to this Rasiah describe as follows: These testable hypotheses could be formulated as follows.
Structural approach has investigated how the market 12 concentration weakens the market competition by fostering collusive behavior among firms Panzar, J. Credit risk trend may bring a series collapse against the sector as well as the nation economy Belayneh The importances of fee-based services of commercial banks are to increase the non-interest income.
The Structure-Conduct-Performance SCP hypothesis, which also sometimes referred to as the MP hypothesis, asserts that increased market power yields monopoly profits. The theoretical frame work upon which this study is based on structural approaches to investigate behavior of the banking market regarding to profitability.
As determained by Aburime company level determinants of bank profitability evidence from Nigeria. And the fourth the retention of inefficient managers or the maintenance of inefficient practices allowing managers to live a quiet life to pursue other objectives or maintain market power gains.
Capital Adequacy It is measureing by the ratio of equity capital to total risk weighted assets. The literature suggests that, the environment in which banks operate influences them, like any firm; from this, the external environment is the commen and the uncontrole one.
According Aburime investigation on Nigeria banking industry on the area of bank performance and supervision by adopted the data envelopment analysis approach founded that, the profitability of the bigger banks is significantly higher than that of the smaller banks.
It blamed large-scale industrial production for destroying middle class shop keepers and small manufacturers and promoted increased property ownership and a return to small scale living.The main objective of the paper is to analyze the impact of bank specific and macro-economic factors on the profitability of selected Ethiopian private commercial banks over the period of to.
Determinants of Profitability: An Empirical Study on Ethiopian Microfinance Institutions Sima Gudeta A Thesis submitted to The Department of Accounting and Finance Presented in Partial Fulfillment of the Requirements for the Degree of Masters of Science in Accounting and Finance Addis Ababa University Addis Ababa, Ethiopia May.
were sixteen, of which thirteen were private and the remaining three state-owned (NBE, ). During the same period there were a total of commercial bank branches in the country (NBE, ).
One branch of a bank on the average is estimated to serve 95, people in Ethiopia as at December (NBE, ). Macroeconomic Determinants of Bank Profitability,” Bank of Greece Working Peltzman, S. (), “The Gains & Loss from Industrial Concentration,” Journal of law & Economics, 20(3). Perry, P.
(), “Do Banks Gain or Loss from Inflation,” Journal of Retail Banking, 14(2), estimation to investigate the determinants of profitability in six selected European countries banking sectors: Denmark, France, Germany, Italy, Spain, and the UK, for the period The result suggested that bank- specific determinants and profitability relationship is very strong.
Agorism; Anarchism; Anarcho-capitalism; Autarchism; Christian libertarianism; Collectivist anarchism; Consequentialist libertarianism; Free-market anarchism.Download