Internal Factors Affecting Albanian Banking Profitability

Abstract

The purpose of this study is to analyze some of the more important internal factors that affect the profitability of commercial banks in Albania. The aim of this paper is to find out the relationship between the internal factors and bank profitability. Bank profitability is measured by Return on Assets (ROA) as a function of some important determinants taken in consideration in this research. Through this paper I would like to show how practical results seem to be equal to the empirical results. This paper analyzes the profitability of commercial banks in Albania over the time period from 2005 to 2012 for 12 commercial banks in Albania organize by 95 observations. This paper uses regression analysis fixed effect model to implicate the results with the respective hypotheses. The factors taken into consideration are Bank size, Loans, Deposit, Credit Risk, Interest income etc. The result from the analysis shows that, few of internal variables have significant influence on a bank's to total assets and some other have no significant effect on bank profitability.