Impact of Bank Specific and Macroeconomic Determinants

Added on - 22 Nov 2020

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1The Impacts ofbank-specificdeterminants andmacroeconomics determinants ontheprofitabilityof banks. A comparative study ofOMAN and UAE
2TABLE OF CONTENTSINTRODUCTION................................................................................................................................3Title or topic area of proposed study.........................................................................................3What is the aim of the study?.....................................................................................................3What are the objectives of your study?......................................................................................3What is the rationale for your study?.........................................................................................3BRIEF REVIEW OF RELEVANT LITERATURE................................................................................5Provide a concise outline of research methodology.........................................................................10Research Strategy...................................................................................................................11Research Design......................................................................................................................11Sampling:.................................................................................................................................11Project Plan.............................................................................................................................12References......................................................................................................................................13
3INTRODUCTIONTitle or topic area of proposed studyThe Impacts of bank-specific determinants and macroeconomics determinants on the profitability of banks- A comparative study of OMAN and UAEWhat is the aim of the study?Aim of study is to identify impact ofbank-specific determinants and macroeconomics determinants onprofitability of banks in Oman and UAE.What are the objectives of your study?Objective of study is to examine external and internal determinants which affect bank’s profitability.The further breakdown of objective is given as below:1.To investigate influence of capital adequacy on profitability of banks.2.To investigate influence of credit risk on profitability of banks.3.To investigate influence of bank size on profitability of bank.4.To investigate the influence of inflation on profitability of bank.5.To investigate influence of GDP on profitability of bank.What is the rationale for your study?Banks are considered as the backbone of every economy. Banking sector plays an enormous role inreinforcing the economic growth and country’s prosperity, whereby it sustains financial stability with itshuge contribution through effective use of the financial resources in all over the economy. (Masood &Ashraf, 2012). Moreover, the profitable and sound banking system in an economy is more crucial toimprove the financial stability of any country along with its economic growth, so the economicturbulences and crisis, uncertainties of external shocks can be avoided by solid economies. This study will
4be conducted to analyze stability of banking system in Oman as well as in UAE. Profitability of banks andtheir generation of higher revenues in any economy reflects economic character of any country andcontributes in country’s infrastructure. On contrary, if banking system in any economy collapses or facesinsolvency, this in turn will lead to lack of country’s growth, economic deficits, increase governmentdebts and damage the country’s reputation (Athanasoglou, et al., 2008).Further, spillover impacts can be generated on various sectors of the country, due to the crisis stem fromthe banking sector, and this may cause systemic risk in the economy. Banks are important pillars incountries, whereby they can provide fund and loans to local companies of any particular country in orderto expand their businesses internally or internationally (reference). The banks also contribute in theestablishment and creation of new business ventures in any country through various forms and means suchas providing those companies with capital (Athanasoglou, et al., 2008). Therefore, this will boost thecountry’s economy and lead towards progression. Banks need to generate higher profits and revenues forthe sake of gaining trust of public, shareholders, investors and depositors in order to be more efficient andcompetitive. As a result, this will positively influence the political and economic stability of country(UNDP, 2009). In addition, all these factors indicate that the banking sector has been always taken intoconsideration, due to its importance in the economy, and also the profitability of banks has been always aconsiderable issue for almost every country around the world (Cole, 1974). The bank’s profitabilitycaptures the interests of government, Central Banks, shareholders and depositors. (Cole, 1974). Hence, itis important to analyze determinants of banks profitability to ensure sustainability and enhancement of theeconomic situation in Oman and UAE. Moreover, primary purpose of conducting this research is toidentify impacts of banks specific determinants and macroeconomic determinants on profitability of thebanks in Oman and UAE. For analysis purpose, various variables have been studied under financialinstitutio specific determinant’s category and macroeconomic determinants category on banksprofitability.These variables are capital adequacy, bank size, credit risk, inflation and GDP. Incomputation of these factors, the standard equation has been connected so we accomplish the exact figuresto be more guaranteed that the outcomes will be more trust-able. The results of this examinationdemonstrate productive for investors, government, and financial specialists when the turns come identifiedwith settle on any choice regarding making an interest in some task or need to actualize the newarrangement (Al-Malkawi and Pillai, 2018). Besides, for financial specialists, this examinationinvestigates the most beneficial bank which creates more comes back with less hazard risk, so they cansettle on the correct choice to make an interest in banks. This would be fundamentally valuable for banksto have sound understanding identified with components influencing bank's benefit along these lines, itcould be useful to the bank to recognize the variables which cause influencing the bank's execution, andthe sound moves can make place to enhance the general execution of banks.
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