Essay: Bank performance in Egypt

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  • Subject area(s): Finance essays
  • Reading time: 2 minutes
  • Price: Free download
  • Published on: November 16, 2017
  • File format: Text
  • Number of pages: 2
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This research aims at examining the determinants of bank performance in Egypt by measuring the effect of the following factors: capital adequacy, assets quality, management quality, and liquidity on the bank performance measured by the profitability (return on equity) and the risk (the standard deviation of the return on equity ) in comparison analysis between Islamic and commercial banks.

Seven banks are chosen as a sample which was divided into three categories according to their nature: 3 Commercial banks 3 Islamic banks, and one mixed bank. The research used annual financial statements and reports published in each bank website for the period 2008 – 2016.

A series of multiple- regression and cross section analysis were employed for each model to test the hypotheses. The results show that the commercial banks are commanding in some figures. It was clear that there are significant differences between Islamic and commercial banks regarding financial measures. The commercial banks are superior in the management quality that was measured by the total loans to the total deposit ratio. The commercial banks are also superior in the liquidity management that was measured by net loans to the total assets. This mean that the Islamic banks take less risk by holding high level of liquidity which results in low profitability. In addition, bank type, whether the bank is conventional or Islamic, was proved to have some sort of influence on the determinants of the bank profitability.

Nowadays the banks play a significant role in our society, and it is not even possible to imagine the life without banks. In order to stimulate the economy of any specific country the government does this via banking system by using “Monetary Tools”. Moreover, all of the finance and business transactions that we are being involved in are done through the banks.

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