Aug 2026· Journal of Risk and Financial Management· Vol 19, pp. 572· 0 citations· 42 references
Abstract
This research adds to the existing literature by examining the impact of IFRS 9 in a context where accounting reforms, prudential regulation and credit growth are strongly intertwined. Studies examining the impact of IFRS 9 implementation on profitability for banks provide inconclusive evidence. We find that our results are both robust to static panel estimators and strengthened by dynamic specifications. The transition from an incurred loss to an expected credit loss (ECL) model thus entails short-term profitability costs by bringing forward credit impairment recognition, increasing provisioning and lowering reported earnings. Results show that NPLs and leverage have a persistent negative impact on ROA, while a larger bank size and cash contribute positively to profitability. Liquidity is negatively related but statistically insignificant, indicating that its role is primarily a prudential rather than an earnings component. Given that, in dynamic models, higher GDP and inflation lead to lower profitability at the macroeconomic level, and expansionary conditions do not improve bank performance even if expected loss recognition increases or operating expense falls. IFRS 9 is hence a possible source of major institutional reform with real influence on financial outcomes, risk appetites and the strength of Cambodia’s banking sector in general.
This study investigates how prudential regulatory instruments introduced by the National Bank of Ethiopia (NBE) influence the profitability and liquidity of private commercial banks in Ethiopia. Using balanced panel data from seven private commercial banks covering the period 2014–2023, the study employs fixed-effects and random-effects regression models to examine the relationship between regulatory measures—including legal reserve requirements, capital adequacy, capital requirements, equity investment limitations, and NBE bill purchase requirements—and bank performance. The findings indicate that prudential regulations affect different dimensions of bank performance in varying ways. Specifically, the legal reserve requirement has a positive and statistically significant effect on bank liquidity, suggesting that higher reserve holdings improve banks’ ability to meet short-term obligations. However, it is associated with a weak negative effect on profitability, highlighting the potential trade-off between maintaining liquidity and generating income. The results also show that higher capital adequacy significantly reduces return on equity, indicating that stronger capital buffers may limit shareholders’ returns. Among bank-specific factors, managerial efficiency is found to be an important driver of profitability, whereas greater dependence on deposit funding is associated with lower profitability. In contrast, capital requirements, equity investment limitations, and NBE bill purchase requirements do not exhibit statistically significant short-run effects on bank profitability or liquidity. Overall, the findings suggest that Ethiopia’s prudential regulatory framework has contributed more strongly to strengthening liquidity and financial stability than to improving bank profitability. The study underscores the need for regulators to maintain an appropriate balance between financial stability objectives and banks’ operational efficiency and profitability in emerging banking systems.
This paper examines the relationship between revenue diversification, profitability, and risk in European banks, with particular emphasis on the structural break induced by the COVID-19 shock. Using quarterly supervisory data from the European Banking Authority (EBA) over the period 2016Q1–2024Q4, we distinguish between pre- and post-pandemic regimes and estimate dynamic fixed-effects models that account for unobserved heterogeneity and persistence in bank performance. The results reveal a pattern consistent with regime dependence. Descriptive (quintile-based) comparisons suggest that banks with greater reliance on non-interest income tended to report higher profitability prior to COVID-19, although data limitations prevent us from confirming this pattern in a full multivariate regression for the pre-COVID subsample. In the post-COVID period, once bank and time fixed effects, persistence, and balance-sheet characteristics are properly controlled for, revenue diversification does not exert a statistically significant effect on either profitability or earnings volatility; this result is robust across bank fixed effects only, two-way (bank and time) clustered, and one-way (bank) clustered specifications. We show that diversification is systematically associated with differences in bank size, capitalization, and lending intensity, indicating that income structure is closely linked to underlying business model characteristics. These findings suggest that the observed diversification–performance relationship largely reflects cross-sectional heterogeneity rather than a stable causal effect. Overall, the evidence indicates that revenue diversification does not provide a consistent improvement in risk-adjusted performance in European banking. Instead, performance and risk dynamics are primarily driven by balance-sheet composition and persistence. The results highlight the importance of accounting for structural heterogeneity and macroeconomic regimes when evaluating the role of non-interest income in bank performance.
Ifigeneia Persaki, Fotios Siokis· Journal of Risk and Financia...· 0 citations
Inflation poses significant challenges to bank profitability by increasing costs, weakening credit quality, and amplifying macroeconomic uncertainty, thereby altering banks’ lending and portfolio decisions. This study examines whether Sustainability development (ESG) mitigates these effects across 46 developed and emerging economies over the period 2002–2021. Using a dynamic panel estimation approach based on the Generalized Method of Moments (GMM), the analysis accounts for persistence in bank performance and potential endogeneity. The findings indicate that inflation positively affects both return on assets (ROA) and bank net interest margin (BNI), suggesting that banks adjust lending rates more rapidly than funding costs. ESG significantly enhances ROA but is not significant for BNI. Notably, the interaction between ESG and inflation is negative and significant, indicating that ESG attenuates the inflation–profitability relationship and serves as a stabilizing mechanism. These results highlight the strategic role of ESG in strengthening financial resilience under inflationary conditions.
Divine B. Fondem· International journal of bus...· 0 citations
The study examined the effect of sectoral credit allocations (agricultural, manufacturing, and
SME) on the liquidity stability of Nigeria’s banking sector, a dimension often overshadowed
by profitability and capital adequacy studies. Using quarterly times series data for a period
of 24 years, (from 2000Q1–2023Q4) obtained from the Central Bank of Nigeria and World
Bank Development Indicators, the study applied the Fully Modified Ordinary Least Squares
(FMOLS) method with supporting cointegration and error correction models. Findings
revealed a long-run relationship between sectoral credit distribution and liquidity, where
manufacturing credit significantly enhanced liquidity stability, reflecting its relatively
predictable cash flows and lower default risks. In contrast, small and medium-sized
enterprise (SME) credit exerts a negative impact, highlighting its vulnerability to defaults and
financing constraints, while agricultural credit shows no significant effect. These results
suggest that uniform credit expansion policies may undermine systemic resilience. The study
therefore recommended sector-sensitive credit frameworks, including risk-sharing schemes
for agriculture, credit guarantees for SMEs, and targeted incentives for manufacturing, which
is believed are vital for safeguarding liquidity, depositor confidence, and long-term banking
sector stability
S. Amana· International Journal of Eco...· 0 citations
This study investigated the relationship between the upside potentials inherent in credit risk and
the performance of deposit money banks (DMBs) in Nigeria. While credit risk is traditionally
perceived as a threat to banking stability, emerging evidence suggests that it can also present
opportunities for enhanced profitability if effectively managed. The study obtained data from the
Nigerian Deposit Insurance Corporation where credit risk proxied by the ratio of non-performing
loans to total loans (NPLTL) and average liquidity ratio (ALR) as explanatory variables, whereas
return on assets (a proxy of bank performance) as dependent variable, spanning from 1990 to
2023. The Autoregressive Distributed Lag (ARDL) model was employed to estimate the models.
Findings indicate that the ratio of non-performing loans to total loans and advances (credit risk)
significantly affects bank return on assets, a proxy for deposit money banks' performance, whereas
the average liquidity ratio has no significant impact on return on assets. From the findings, Deposit
money banks should adopt a dynamic credit risk management practice; flexible risk management
frameworks that allow them to exploit profitable lending opportunities while controlling potential
losses, among others. The study contributes to the literature on the credit risk-bank performance
nexus, given the ever-changing dynamic economic environment faced by Nigerian banks.
O. M. Ogbulu· Journal of Accounting and Fi...· 0 citations
This paper re-examines the determinants of profitability in Bangladeshi private commercial banks, using a panel-corrected standard errors (PCSE) analysis of ten listed banks over 2014–2023 (n = 100 bank-year observations), together with a post-sample assessment of the sector's extraordinary deterioration through 2024–2025. Profitability is measured by return on assets (ROA), with return on equity (ROE) and net interest margin (NIM) used as robustness checks. Results show that capital adequacy and management efficiency significantly enhance profitability, while asset-quality deterioration and non-performing loans (NPLs) exert strong negative effects; liquidity management and bank size are largely insignificant, pointing to inefficiencies in deployment and scale. GDP growth is statistically negligible within-sample and inflation shows mixed effects, underscoring structural weaknesses in financial intermediation. A winsorization check (1st/99th percentiles) confirms that the capital-adequacy and NPL effects are stable to outlier treatment, while the management-efficiency effect is more sensitive. Extending the analysis with Bangladesh Bank, IMF, and World Bank data through 2025 shows that the sector-wide NPL ratio rose from below 10 percent in 2023 to more than 30 percent by late 2025, alongside a collapse in aggregate capital adequacy a trajectory consistent with, and considerably amplifying, the credit-quality channel identified in the panel results. The study contributes methodologically by applying PCSE in a South Asian context, and offers policy implications for strengthening credit discipline, addressing regulatory forbearance, and improving banking efficiency.
Md. Jahidul Islam, M. Moniruzzaman, A. Haq et al.· Global Disclosure of Economi...· 0 citations
