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Background This study aims to gain insight into the effect of banks' financial performance on their market performance. We conceptualized the research subject on the assumption that the financial performance of an organization is the most important criterion for triggering movement in its stock price. We explored various models and parameters to evaluate financial performance of banks and found CAMELS being one of the most comprehensive and appropriate model. We considered share price growth of banks to measure their stock market performance Methods We collected financial and stock market data pertaining to 32 listed Indian banks for the period 2018 to 2022. The study has employed multiple linear regression analysis of panel data for evaluating the relationship between independent and dependent variables. We adopted panel regression for data analysis and used the Prais- Winsten regression with panel corrected standard errors, as the data suffers from contemporaneous cross-sectional correlation. Results The results show that net non-performing assets, net interest margins, and return on capital have a significant negative impact on share price growth. The capital adequacy ratio and the current and savings account deposit ratios have a positive insignificant impact. The liquid asset-to-total asset ratio has a negative, insignificant impact. The coefficient of determination indicates that the share price growth of banks is more dependent on other factors which are not included in the regression analysis of this study. Conclusion This study helps investors and bankers understand the limited impact of financial parameters on banks'stock prices and to look for other parameters which explain the stock price movement better.

The goal of this research is to identify the factors that influence the net interest margin (NIM) for Palestinian conventional banks. Palestine is a unique country with poor governance, political uncertainty, and regulatory insufficiency, adding higher information asymmetry to the decision-making process. The sample is comprised of unbalanced panel data from 15 commercial banks for the period 2011-2020. The research used a pooled OLS, a fixed-effect model, a random effect model, a robust pooled OLS, a difference GMM, and a system GMM estimators. Evidence collected sup-ports that net interest margin is positively influenced by risk aversion, operating costs, and loan-to-deposit, while being negatively related to credit risk. The effect of size is positive but not robust. The results imply that banks and policymakers can increase efficiency by better controlling these factors. Particularly, operating costs can be reduced by implementing efficient banking technologies and improving management practices that re-duce the cost of staff. In future research, other factors should be considered, including the bank's ownership structure and type, whether Islamic or conventional.

How does bank profitability vary with interest rates? We present a model of a monopolistically competitive bank subject to repricing frictions and test the model's predictions using a unique panel data set on UK banks. We find evidence that large banks retain a residual exposure to interest rates, even after accounting for hedging activity operating through the trading book. In the long run, both level and slope of the yield curve contribute positively to profitability. In the short run, however, increases in market rates compress interest margins, consistent with the presence of nonnegligible loan pricing frictions.

Research Question: In the research, the authors investigate the effect of certain bank-specific, industry-specific, and macroeconomic factors on the profitability indicators of banks in the Republic of Serbia. The main question of the study is what factors have a relationship with profitability indicators and which of them has the most statistically significant impact. Motivation: Based on the research of (Fidanoski et al., 2018; Katusiime, 2021; Horobet et al., 2021), the authors intend to investigate the effects of certain factors on the profitability of the banking sector of the Republic of Serbia. The research should serve as a good indicator for banks to understand exactly which factors have the greatest impact on profitability. Idea: The essence of the research is precisely the discovery of the factors that have the most significant statistical effect on profitability indicators of banks, namely ROA (Return on assets), ROE (Return on equity), and NIM (Net interest margin). Data: The data includes a sample of 22 banks currently operating in the banking market of the Republic of Serbia. The research covers the period from 2014 to 2021 and includes a total of 174 observations. The dependent variables used are ROA, ROE, and NIM as representatives of bank profitability, while the independent variables are divided into three main units, bank-specific, industry-specific and macroeconomic factors. Tools: The research was carried out using the statistical software Eviews. The research includes the application of descriptive statistics and correlation methods. Further analysis includes the unit root test and the variance inflation factor analysis to check for stationarity and multicollinearity of the data. After testing, the authors establish a panel regression model using random and fixed effects, applying the Hausman test to establish a more valid model. Findings: Based on the performed analysis, we conclude that in the case of ROA and ROE, the variables that have the most significant influence on these indicators are liquidity indicator, the level of operating profit, capital adequacy, and loans. While liquidity, loans, and bank sector indicator such as HHI have the most significant effect on NIM. The study also showed that GDP annual growth does not have a statistically significant effect on profitability in the case of banks in the Republic of Serbia. Contribution: The paper contributes to the literature by empirically testing how certain factors affect the profitability of banks in the banking sector of the Republic of Serbia.

The study of firm value and financial risks became more important after the global financial crisis of 2007–2008, as the required risk was mismanaged, resulting in a deterioration in firm value. It is important to study the relationship between financial risks and firm value. This study aims to examine the moderating effect of capital adequacy on the relationship between financial risks and the firm value of listed banks in Pakistan. This study is based on half-yearly secondary data of 560 sample observations from 2009 to 2021. Multiple regression and panel data estimation techniques were employed for the analysis. The study used firm value as a dependent variable, proxied by Tobin’s Q, along with five independent variables and one moderating variable. The results of this study indicate that a higher capital adequacy ratio (CAR) increases firm value and has a moderating effect on financial risks and firm value. Nonperforming loans, net interest margin, and cost income ratio are found to have a significant negative relationship with firm value. The study concludes that the stock prices of listed banks in Pakistan are declining persistently, which causes the stock’s worth to shift from being inflated to being undervalued.

One of the most robust stylized facts in macroeconomics is the forecasting power of the term spread for future real activity. We propose a possible causal mechanism for the forecasting power of the term spread, deriving from the balance sheet management of financial intermediaries and the \"risk-taking channel of monetary policy.\" Monetary tightening leads to the flattening of the term spread, reducing net interest margin and credit supply. We provide empirical support for the risk-taking channel.

Using a sample of 7,919 banks from 30 OECD countries over 1995–2019, we examine the impact of low interest rates on banks’ net interest margins. Our results confirm a positive relationship between interest rates and interest margins, which is stronger in a low interest rate environment. In more concentrated markets, however, interest margins are less sensitive to the level of interest rates, as interest rate sensitivities of income and expense margins match. But our results also suggest that the effect of market concentration on the link between interest rates and interest margins is weaker when interest rates approach zero.

This study aims to examine the determinants of profitability as measured by return on assets, with capital adequacy ratio, loan to deposit ratio, net interest margin as independent variables, and non-performing loans as independent and moderating variables. The research was conducted through the Indonesia Stock Exchange (IDX) website, namely www.idx.co.id with the population being the saturated sample being State-Owned Enterprise Banks of the Republic of Indonesia. The research period is ten years, from 2011 to 2020. The test is carried out using panel data regression using a common effect model. The results show that the capital adequacy ratio has a significant negative effect, the loan to deposit ratio has a significant negative effect, the net interest margin has a significant positive effect and non-performing loans have a significant negative effect on profitability. In addition, as a moderating variable, the results show that non-performing loans are proven to be moderating by weakening the effect of the loan to deposit ratio on profitability. While the effect on the capital adequacy ratio and net interest margin is not proven.

PurposeManagers are concerned about how the macroeconomic environment affects business profit. Focusing on banks, this study aims to investigate the effect of economic policy uncertainty (EPU) on bank profitability in 22 advanced countries.Design/methodology/approachThe study used the panel fixed effect regression methodology to assess the effect of EPU on several measures of bank profitability for 22 advanced countries from 1998 to 2017. The measures of bank profitability are net interest margin, lending-deposit spread, non-interest income (NII) ratio, after-tax return on asset, before-tax return on asset, after-tax return on equity and before-tax return on equity.FindingsThe findings reveal that high EPU negatively affects bank NII. Real gross domestic product growth rate, nonperforming loans and regulatory capital ratio are negatively related to profitability in times of high EPU. The findings also reveal that high EPU has a positive effect on bank profitability in Asia and the region of the Americas, as these regions witnessed high return on equity in times of high EPU.Practical implicationsThe implication of the findings is that, although EPU has a depressive effect on some indicators of bank profitability, regional characteristics can ameliorate the depressive effects of EPU on bank profitability.Originality/valueThis study contributes to the literature that examine the economic consequences of EPU on firms. To the best of the authors’ knowledge, this study is among the first to examine how regional characteristics affect the relationship between EPU and bank profitability using cross-country data.

This paper analyses the determinants of net interest margin during the period 2008–2014 in the Euro Area. The starting point of the analysis is the premise that this variable is a gauge of financial institutions’ health and stability. In particular, since the outbreak of the global financial crisis, difficulties in achieving sustainable levels of profitability, mainly due to the vulnerable margins from the banks’ traditional activity, have significantly increased the fragility of the European banking system. Besides considering the main bank-level drivers affecting the net interest margin such as market power, capitalization, interest risk and the level of efficiency, we explicitly account for the effects of regulatory and institutional settings. The results show a persistence in the vulnerability of the banks’ sustainable profitability, even though this negative trend has been partly mitigated by the European Central Bank (ECB)’s recent monetary policies. The increase in non-traditional activities as well as the heterogeneous efficiency levels characterizing banking systems across the Euro Area, where operating costs remain generally high, have significantly contributed to the slowdown in bank margins from traditional activity. Finally, the regulatory environment is an important driver of the net interest margin, which remained lower in countries with higher capital requirements and greater supervisory power.