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Determinants of Banks Profitability: A Case Study of Afghan Commercial Banks

Mr. Shahzad Anwar, Mr. Syed Omarzai

Volume 1 Issue 1 | Jan 2018

DOI: 10.31841/KJEMS.2021.92

Views: 1441

Total Downloads: 25

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Abstract

This study is based on studying the major factors comprises of Earning Assets to Total Assets, Loan to Deposit and Size of firms affecting the profitability in Afghan banks, the views of those various authors and researchers who conducted papers on banks profitability is also considered. The analysis is based on panel data comprised of six Afghan banks over the periods of (2010 – 2015). As a result of diagnos¬tic test The Fixed effects model is identified and applied to analyze and discuss the results of the data. The results suggest that each of the three variables which are ETA, LTD and size of firm has significant impacts on Afghan banks profitability, with the values of 0.000, 0.048, and 0.057 respectively. The data analyses carried out for this research was to test the hypothesis that whether there is a positive or neg¬ative relationship between the variables. The results reveal that there is a positive effect of the indepen¬dent variables on the dependent variable i.e. earning asset to total asset, loan to deposit and size of firm.