Determinants of Bank Profitability in South Africa

Dissertation Title: Determinants of Bank Profitability in South Africa. The prime rationale for conducting the research is to find the factors that affect the bank’s profitability in the South African region so that appropriate measures can be taken to improve the financial performance. This research provides empirical evidence based on the analysis of the bank’s real financial data in support of the determinants of the bank’s profitability. Thus, this research is considered to be useful in enhancing the knowledge of the bank professionals, as well as the students pursuing higher studies in finance and banking.

The banking sector has been blamed the most for the financial crisis that happened in the recent past. Therefore, it has been perceived to be very important to research and find the factors that affect the bank’s profitability so that the situation could be controlled in the cases of the financial crisis. In this context, this research explores the relationship of the factors such as liquidity, management efficiency, capital adequacy, the scale of operations, productivity of assets, growth in gross domestic product, and inflation with the return on equity.

The primary aim of this dissertation is to explore the determinants of bank’s profitability in the South African region. For this purpose, the research is aimed to find the crucial factors that affect the bank’s profitability in the South African region. Further, in this regards, the degree of influence of the factors on the bank’s profitability has also been evaluated in this dissertation. With regards to the research aim, the following objectives have been developed, which are to be addressed in this research:

• To review, research, and understand the regulatory framework prevailing in the South African region
• To study the bank system in South Africa through developed models and evaluate the factors, which contribute to the bank’s profitability
• To explore the determinants of bank’s profitability in the South African region

Dissertation Contents

Introduction
Background of the Research
Rationale for Doing the Research
Aim and Objectives
Research Question
Significance of the Research
Organisation of the Research

Literature Review
Bank Specific Factors Affecting the Profitability
Size of the Bank
Capital
Credit Risk Management
Product and Service Portfolio
Efficient Management Team
Liquidity Management
Industry or Sector Specific Factors
Banking Regulation in South Africa
Gross Domestic Product
Inflation
Prime Lending Rates
Taxation and Foreign Trade

Topic Description

Research Methodology
Research Question
Research Approach
Research Design
Data Collection Method
Selection and Justification
Sample Size and Sampling Strategy
Data Analysis Process and Tools
Ethical Considerations
Limitations of the Research

Data Analysis
Analysis of the CAMEL Ratios
Liquidity
Capital Adequacy
Efficiency
Non-Performing Loans
Net Interest Margin
Productive Asset Ratio
Size Ratio
Advance and Loans to Deposit Ratio
Analysis of the Gross Domestic Product
Analysis of the Inflation

Discussion

Conclusion
Brief Summary
Conclusion
Recommendations

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