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Internal Factors Affecting Albanian Banking Profitability

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  • Eliona Gremi

Abstract

The purpose of this study is to analyze some of the more important internal factors that affect the profitability of commercial banks in Albania. The aim of this paper is to find out the relationship between the internal factors and bank profitability. Bank profitability is measured by Return on Assets (ROA) as a function of some important determinants taken in consideration in this research. Through this paper I would like to show how practical results seem to be equal to the empirical results. This paper analyzes the profitability of commercial banks in Albania over the time period from 2005 to 2012 for 12 commercial banks in Albania organize by 95 observations. This paper uses regression analysis fixed effect model to implicate the results with the respective hypotheses. The factors taken into consideration are Bank size, Loans, Deposit, Credit Risk, Interest income etc. The result from the analysis shows that, few of internal variables have significant influence on a bank’s to total assets and some other have no significant effect on bank profitability.

Suggested Citation

  • Eliona Gremi, 2013. "Internal Factors Affecting Albanian Banking Profitability," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 2, October.
    • Handle: RePEc:bjz:ajisjr:416
    DOI: 10.5901/ajis.2013.v2n9p19
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    References listed on IDEAS

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    1. Berger, Allen N, 1995. "The Relationship between Capital and Earnings in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(2), pages 432-456, May.
    2. Athanasoglou, Panayiotis P. & Brissimis, Sophocles N. & Delis, Matthaios D., 2008. "Bank-specific, industry-specific and macroeconomic determinants of bank profitability," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 18(2), pages 121-136, April.
    3. Berger, Allen N, 1995. "The Profit-Structure Relationship in Banking--Tests of Market-Power and Efficient-Structure Hypotheses," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(2), pages 404-431, May.
    4. Edwards, Franklin R, 1977. "Managerial Objectives in Regulated Industries: Expense-Preference Behavior in Banking," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 147-162, February.
    5. Bonin, John P. & Hasan, Iftekhar & Wachtel, Paul, 2005. "Bank performance, efficiency and ownership in transition countries," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 31-53, January.
    6. Molyneux, Philip & Thornton, John, 1992. "Determinants of European bank profitability: A note," Journal of Banking & Finance, Elsevier, vol. 16(6), pages 1173-1178, December.
    7. Goddard, John & Molyneux, Phil & Wilson, John O S, 2004. "Dynamics of Growth and Profitability in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(6), pages 1069-1090, December.
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    1. Ekaterina Koroleva & Shawuya Jigeer & Anqi Miao & Angi Skhvediani, 2021. "Determinants Affecting Profitability of State-Owned Commercial Banks: Case Study of China," Risks, MDPI, vol. 9(8), pages 1-19, August.

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