IDEAS home Printed from https://ideas.repec.org/a/gam/jrisks/v13y2025i7p123-d1689018.html
   My bibliography  Save this article

Determinants of Banking Profitability in Angola: A Panel Data Analysis with Dynamic GMM Estimation

Author

Listed:
  • Eurico Lionjanga Cangombe

    (Faculty of Economics and Business, University of Vigo, 36310 Vigo, Spain)

  • Luís Gomes Almeida

    (GOVCOPP—Research Unit on Governance, Competitiveness and Public Policies, Higher Institute of Accounting and Administration of Aveiro, Aveiro University, 3810-193 Aveiro, Portugal
    RGEAF Group Research-ECOBAS, University of Vigo, 36310 Vigo, Spain)

  • Fernando Oliveira Tavares

    (REMIT—Research on Economics, Management and Information Technologies, Department of Economics and Management, Universidade Portucalense, 4200-027 Porto, Portugal
    Instituto Superior Miguel Torga, Largo da Cruz de Celas nº 1, 3000-132 Coimbra, Portugal)

Abstract

This study aims to analyze the determinants of bank profitability in Angola by employing panel data econometric models, specifically, the Generalized Method of Moments (GMM), to assess the impact of internal and external factors on the financial indicators ROE, ROA, and NIM for the period 2016 to 2023. The results reveal that credit risk, operational efficiency, and liquidity are critical determinants of banking performance. Effective credit risk management and cost optimization are essential for the sector’s stability. Banking concentration presents mixed effects, enhancing net interest income while potentially undermining efficiency. Economic growth supports profitability, whereas inflation exerts a negative influence. The COVID-19 pandemic worsened asset quality, increased credit risk, and led to a rise in non-performing loans and provisions. Reforms implemented by the National Bank of Angola have contributed to strengthening the banking system’s resilience through restructuring and regulatory improvements. The rise of digitalization and fintech presents opportunities to enhance financial inclusion and efficiency, although their success relies on advancing financial literacy. This study contributes to the literature by providing updated empirical evidence on the factors influencing bank profitability within an emerging economy’s distinctive institutional and economic context.

Suggested Citation

  • Eurico Lionjanga Cangombe & Luís Gomes Almeida & Fernando Oliveira Tavares, 2025. "Determinants of Banking Profitability in Angola: A Panel Data Analysis with Dynamic GMM Estimation," Risks, MDPI, vol. 13(7), pages 1-21, June.
    • Handle: RePEc:gam:jrisks:v:13:y:2025:i:7:p:123-:d:1689018
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-9091/13/7/123/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-9091/13/7/123/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tiago M. Dutra & João C. A. Teixeira & José Carlos Dias, 2024. "The effect of political institutions on the interplay between banking regulation and banks’ risk," Journal of Banking Regulation, Palgrave Macmillan, vol. 25(2), pages 179-196, June.
    2. Mohamed Dia & Amirmohsen Golmohammadi & Pawoumodom M. Takouda, 2020. "Relative Efficiency of Canadian Banks: A Three-Stage Network Bootstrap DEA," JRFM, MDPI, vol. 13(4), pages 1-25, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aleksandra Ostrowska, 2023. "Makroekonomiczne determinanty jakości kredytów dla sektora niefinansowego w Polsce," Bank i Kredyt, Narodowy Bank Polski, vol. 54(5), pages 541-556.
    2. Li, Zixian & Moreira, Fernando, 2024. "Financial openness, liability composition of banks, and bank risk: International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 97(C).
    3. Zeng, Peng & Tang, HaiYing & Wei, Xu, 2024. "Quantitative simulation and validation of energy carbon emission efficiency changes in Chinese urban agglomerations," Energy, Elsevier, vol. 312(C).
    4. Vijay Kumar & Ron Bird, 2020. "Do Profitable Banks Make a Positive Contribution to the Economy?," JRFM, MDPI, vol. 13(8), pages 1-18, July.
    5. Shahsuzan Zakaria, 2023. "The Need to go Beyond Deterministic Data Envelopment Analysis (DEA): A Comparative Analysis with Bootstrapping DEA in Risk Management Efficiency Measurements," Information Management and Business Review, AMH International, vol. 15(4), pages 433-446.
    6. Béchir Ben Lahouel & Lotfi Taleb & Kristína Kočišová & Younes Ben Zaied, 2023. "The threshold effects of income diversification on bank stability: an efficiency perspective based on a dynamic network slacks-based measure model," Annals of Operations Research, Springer, vol. 330(1), pages 267-304, November.
    7. Lapinskaitė, Indrė & Stasytytė, Viktorija & Skvarciany, Viktorija, 2025. "Unveiling how efficiently sustainability transforms into intangible assets of financial institutions," Research in International Business and Finance, Elsevier, vol. 76(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jrisks:v:13:y:2025:i:7:p:123-:d:1689018. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.