Effect of inflation rate on banks profitability pdf
19 Jul 2015 Bank sizes and macroeconomic variable show no impact on profits. Inflation affects most economic variables, interest rate in particular. determinant of bank profitability has attracted the interest of academic research as well results indicate that bank-specific characteristics and macroeconomic variables explain up to operating expenses increase at a faster rate than inflation. The www.failaka.com/downloads/Profitability_Islamic_Banking.pdf. Accessed of the effect between inflation and profitability of banks using reported profit, return on equity (ROE) interest rate completely reflects the expected inflation rate. 6 Nov 2011 effect on the profitability of Islamic banks in Indonesia. as the high rates of inflation usually lead to high lending rates, which is reflected Key words: Inflation, profitability, banks Introduction There is now a substantial body of evidence indicating that sustained—and, therefore, likely predictable—high rates of inflation can have adverse consequences either for an economy's long-run rate of real growth or for its long-run level of real activity (Boyd et al, 2000). A growing Purpose of this research was to find effect of inflation rate, interest rate and exchange rate on bank profitability. Population of this research was LQ-45 Banks, listed at Indonesia Stock Exchange of February – July 2008. Data was quarterly data banks have real assets and liabilities as well (land. buildings, office equipment, equities. etc.). These, however, make up a very small portion of bank portfolios and are irrelevant in assessing the effect of inflation on banks. G. 2 Sanfoni is a senior economist at the Federal Reserve BankofSt. Louis, Thomas A. Pollmannprovidedresearch
3 Jul 2017 interest rates have a negative effect on bank profits. policymakers only have the nominal interest rate in hand, inflation is determinative for Basel Committee on Banking Supervision, http://www.bis.org/publ/bcbs270.pdf,.
rate fluctuations could be an important source of risk for banking institutions. In the worst case, large foreign exchange losses could lead to bank failures besides causing huge burdens on banks’ profitability. The research objective was to determine the effects of exchange rate fluctuations on financial performance of commercial banks in Kenya. How changes in interest rates affect banks’ performance has been a subject of much practical and some academic research. Obviously, bank shareholders and other investors are keenly interested in how changes in interest rates affect the income and profitability of banks (e.g., see banking and investment textbooks such as Mishkin, 2015). The study conducted to check and examine the market interest rate effect on the bank's profitability in public and private sectors of Pakistan. On the relationship between inflation and financial performance, profits indicate a negative relationship. As inflation decrease, profits increase. The relationship between inflation and total assets indicate no clear pattern therefore a weak relationship. The total
largest effect on profitability of commercial banks. In comparison to other variables, exchange rates however had least effect on profitability of commercial banks. Inflation only had significant effect on ROA as a measure of profitability of commercial banks. The study recommends that regulatory bodies like Central Bank of
which are away from the bank administration's control such as inflation, interest rates effect of interest rate on banking profitability in specific concept will be. 11 Oct 2015 The endowment effect was a big source of profits at high inflation rates and when competition within the banking sector and between banks and concentration has positive impacts on Tunisian banking profitability. More fact, high inflation rates are generally associated with high loan interest rates, and. 1 Jan 2009 Bank profits are high in Sub-Saharan Africa (SSA) compared to other regions. significant impact on bank interest rate margins. In other words, the effect of inflation on the nominal interest rates on loans and deposits does. Bank Indonesia rate, Jakarta stock index, exchange rate and the crude oil State -owned banks contribute the largest share of bank net profits at 44.8 per cent the rate of inflation and economic growth only had a significant effect on ROA
Purpose of this research was to find effect of inflation rate, interest rate and exchange rate on bank profitability. Population of this research was LQ-45 Banks, listed at Indonesia Stock Exchange of February – July 2008. Data was quarterly data
The study conducted to check and examine the market interest rate effect on the bank's profitability in public and private sectors of Pakistan.
2 Feb 2015 This research is investigating the effects of macroeconomic variables on the performance of textile industry of H1: Inflation rate have a significant positive impact on the Return on Assets of textile industry in Explanatory Factors of Bank Performance. Internal and external determinants of profitability.
2 Feb 2015 This research is investigating the effects of macroeconomic variables on the performance of textile industry of H1: Inflation rate have a significant positive impact on the Return on Assets of textile industry in Explanatory Factors of Bank Performance. Internal and external determinants of profitability.
There are certain exogenous determinants that can alter a bank’s profitability. Most of the research studies use a common set of macroeconomic determinants. The most frequently used are inflation, business cycles, and interest rates. Other variables include industry size, ownership, and market concentration. Another macroeconomic factor that affects bank’s profitability is inflation rate (Rovell, 1979). His argument takes a view that the effect of inflation on bank profitability depends on the rate at which the bank’s wages and other operating expenses increase compared to inflation. largest effect on profitability of commercial banks. In comparison to other variables, exchange rates however had least effect on profitability of commercial banks. Inflation only had significant effect on ROA as a measure of profitability of commercial banks. The study recommends that regulatory bodies like Central Bank of As a result it is found that there is strong and positive correlation between interest rate and commercial banks‟ profitability. It means if the value of interest rate is increases/decreases then as result value of banks‟ profitability will also increases/decreases.