Determinants of Banks’ Profitability: Empirical Evidence from Sri Lanka

Abstract

This paper aims at empirically examining the impact of bank-specific factors and macroeconomic variable on the Vietnam listed banks' profitability over the period for 2007-2016 by using the ratios return on assets (ROA) as a proxy of profitability. A total 80 listed banks' financial reports were analyzed and the statistical tool employed is the technique of linear multiple regression analysis. Empirical results found that bank-specific factors such as non-performing loan ratio, operating expenses to total assets ratio and total loan to total assets ratio have significant negative impact on the return on assets, while equity to assets ratio is found to have a positive significant impact. However, deposit to assets ratio and inflation ratio are found to be insignificant on affecting the profitability of banks.