Bank-Specific Profitability and Macroeconomic Indicators

Abstract

Factors impacting banks' bottom lines are the focus of this research. The study's goal is to analyze the key performance indicators of global banking institutions' financial health. It establishes a connection between 251 international banks and a wide range of economic, industrial, and macroeconomic data affecting their bottom lines. From 2009 to 2017, the analysis draws on a panel of financial statements from several institutions. Empirical evidence suggests that banks' poor loan quality and inability to profitably leverage rising deposit volumes are problems. Banks might gain from a depreciating currency rate even if they generate minimal earnings from their main banking activity. Return on equity is a common indicator of a company's profitability, and it tends to rise in tandem with operational efficiency. An additional area of research might focus on how the evolution of technology affects the productivity of both broad economic and banking sectors through time. This research provides supporting evidence for the existence of a distinction between the profit patterns of banks with foreign capital and those owned only by local investors. The findings also suggest that more bank mergers are possible to take advantage of economies of scale.The banking industry may use the findings of this research to clarify several issues.