Bank Profitability Case Study

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Banks play very important roles in the economic development of nations as they will over supply of money in circulation and are the main stimuli of economic progress. Therefore, a strong banking sector is vital for growth, generating wealth and increasing Gross Domestic Product (GDP) growth. Dr. Dhanuskodi, 2012, said that bank performance is the reflection of the way in which the resources of a bank are used in a form which enables it to achieve its objectives. As a result, not all factors are related in contributing the bank profitability. Research is revealing that the performance of a bank was depended on certain factors and not same for all banks. This means that for Bank Rakyat, it have its own factors that will contribute to the bank…show more content…
However we have changed the independent variables as we make a combination from the past study did by Kok Yoke Teng et al., 2012, and Ezreena Jasmine et al., 2011 which indicating their independent variables relate with bank profitability. Thus the independent variables which are included in determining the outcome of the study are internal and external factors. Internal factor involves bank size, total deposits, total loans, operating expenses and non-performing loan which contribute to the bank profitability. External factors involve inflation rate and gross domestic product which contribute to the bank profitability. Meanwhile the dependent variable is the bank profitability which is measure by return of asset (ROA).

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The effect of a bank’s on its profit level is not uniform. These variables controls according to the size of each credit institution. Some of earlier studies have different results. The first factor could lead to a positive relationship between the bank size and profit level of the bank. A study that have been done significant to this are Davydenko.A,(2010) and Asma R.I. et al. (2011). Meanwhile, there were studies that insignificant relationship between bank size and bank profitability. A study that has been done which obtained the same result as this are Ezreena.J et al, (2011) and Imad Z.R et al.,
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