Abstract
This study determines the factors affecting the profitability of licensed commercial banks (LCBs) in Sri Lanka, including the effect of the prolonged conflict which ended in 2009. Using an error correction model together with data for the period 2006–2014 of 10 major LCBs, the results reveal that, in the short run, capital and liquidity have a positive effect on bank profitability and default loans, interest margin (IM), operating cost, and interest rates (IRs) have a negative effect. In the long run, bank profitability is significantly impacted by default loans, IM, real GDP, inflation, IRs, capital, operating cost, and conflict. The ending of the prolonged conflict has significantly contributed to improved bank performance.
| Language | English |
|---|---|
| Pages | 2106-2116 |
| Number of pages | 11 |
| Journal | Applied Economics |
| Volume | 49 |
| Issue number | 21 |
| DOIs | |
| State | Published - 3 May 2017 |
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On the profitability of commercial banks : the Sri Lankan case. / Ariyadasa, C; Selvanathan, E. A.; Siddique, M. A B; Selvanathan, Saroja.
In: Applied Economics, Vol. 49, No. 21, 03.05.2017, p. 2106-2116.Research output: Contribution to journal › Article
TY - JOUR
T1 - On the profitability of commercial banks
T2 - Applied Economics
AU - Ariyadasa,C
AU - Selvanathan,E. A.
AU - Siddique,M. A B
AU - Selvanathan,Saroja
PY - 2017/5/3
Y1 - 2017/5/3
N2 - This study determines the factors affecting the profitability of licensed commercial banks (LCBs) in Sri Lanka, including the effect of the prolonged conflict which ended in 2009. Using an error correction model together with data for the period 2006–2014 of 10 major LCBs, the results reveal that, in the short run, capital and liquidity have a positive effect on bank profitability and default loans, interest margin (IM), operating cost, and interest rates (IRs) have a negative effect. In the long run, bank profitability is significantly impacted by default loans, IM, real GDP, inflation, IRs, capital, operating cost, and conflict. The ending of the prolonged conflict has significantly contributed to improved bank performance.
AB - This study determines the factors affecting the profitability of licensed commercial banks (LCBs) in Sri Lanka, including the effect of the prolonged conflict which ended in 2009. Using an error correction model together with data for the period 2006–2014 of 10 major LCBs, the results reveal that, in the short run, capital and liquidity have a positive effect on bank profitability and default loans, interest margin (IM), operating cost, and interest rates (IRs) have a negative effect. In the long run, bank profitability is significantly impacted by default loans, IM, real GDP, inflation, IRs, capital, operating cost, and conflict. The ending of the prolonged conflict has significantly contributed to improved bank performance.
KW - Commercial Bank
KW - error correction model
KW - operating cost
KW - profitability
KW - real GDP
UR - http://www.scopus.com/inward/record.url?scp=84987654753&partnerID=8YFLogxK
U2 - 10.1080/00036846.2016.1231909
DO - 10.1080/00036846.2016.1231909
M3 - Article
VL - 49
SP - 2106
EP - 2116
JO - Applied Economics
JF - Applied Economics
SN - 0003-6846
IS - 21
ER -