Determinants of bank profitability in a developing economy: empirical evidence from the Philippines

• Main Authors: Sufian, Fadzlan, Razali Chong, Royfaizal
• Format: Article
• Language: English
• Published: Asian Academy of Management (AAM) and Penerbit Universiti Sains Malaysia 2008
• Online Access: http://psasir.upm.edu.my/id/eprint/56384/1/Determinants%20of%20bank%20profitability%20in%20a%20developing%20economy%20empirical%20evidence%20from%20the%20Philippines.pdf; http://psasir.upm.edu.my/id/eprint/56384/; http://web.usm.my/journal/aamjaf/vol4_2_2008.html

The present paper seeks to examine the determinants of Philippines banks profitability during the period 1990–2005. The empirical findings suggest that all the bank-specific determinant variables have a statistically significantly impact on bank profitability. The empirical findings suggest that size, credit risk, and expense preference behaviour are negatively related to banks' profitability, while non-interest income and capitalisation have a positive impact. During the period under study, the results suggest that inflation has a negative impact on bank profitability, while the impact of economic growth, money supply, and stock market capitalisation have not significantly explained the variations in the profitability of the Philippines banks.