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Determinants of profitability of commercial banks in the United Kingdom

   

Added on  2020-03-07

7 Pages1412 Words73 Views
Determinants of profitability ofcommercial banks in the UnitedKingdom
Determinants of profitability of commercial banks in the United Kingdom_1
TABLE OF CONTENTSintroduction......................................................................................................................................3literature review...............................................................................................................................3conclusion........................................................................................................................................5refrences...........................................................................................................................................6
Determinants of profitability of commercial banks in the United Kingdom_2
INTRODUCTIONA literature review is a significant part of research study as it shows viewpoints of previousresearch scholars on the current topic. The present study is based on the factors which affect theprofitability of commercial banks in the United Kingdom by considering bank’s earning capacityand various aspects of banks operating performance. Several studies of research scholars areevaluated to know the factors that change the profits of commercial banks. LITERATURE REVIEW According to the study of Saeed (2014) factors that affect the profitability of banks can becategorized into two parts which are internal and external. The first one i.e. internal factor refersto the organization objectives, policies and decision which are in control of management. It isone of the reasons which create a difference in the profitability of different banks. In this aspect,Boria and co-authors (2017) had stated that Banks performance largely depends on themanagement efforts, qualification and experience of employees which include a decisionregarding loan portfolio concentration. Efforts, awareness and control over the decision of seniorofficials of banks are required for good bank performance. Study of Alessandri and Nelson (2015) control over the expenses is considering the mainfactor of bank’s profitability. Through proper analysis of the expense management can increasethe chances for improvement in the profitability department. This fact is supported by the studyof Culpepper and Reinke (2014) which states that behind the success of every big organizationwhether it is banks or other businesses is man power. The senior officer, management and labourgive their best to their work. If management can manage the staff expenses, then they can reducethe cost. There is no problem to give staff good salary if banks performance is continuouslygrowing. Gibson and Thirlwall (2016) believes that there are some external factors which arebeyond the control of management decisions and policies but have significant influence over theprofitability of banks. It is included in the performance report which helps to identify the reasonsbehind performance separately. To support this statement, the study of Saghi-Zedek and Tarazi(2015) shows the relationship between market structure and profitability. Bank’s performance is
Determinants of profitability of commercial banks in the United Kingdom_3

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