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Determinants of Bank Profitability in a Developing Economy: Empirical Evidence from the Philipinnes

Author

Listed:
  • Fadzlan Sufian

    () (Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia)

  • Royfaizal Razali Chong

    (Khazanah Research and Investment Strategy, Khazanah Nasional Berhad, Malaysia)

Abstract

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.

Suggested Citation

  • Fadzlan Sufian & Royfaizal Razali Chong, 2008. "Determinants of Bank Profitability in a Developing Economy: Empirical Evidence from the Philipinnes," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 4(2), pages 91-112.
  • Handle: RePEc:usm:journl:aamjaf00402_91-112
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