The impacts of bank-specific, industry-specific and macroeconomic variables on commercial bank financial performance: evidence from the Gulf cooperation council countries

ABSTRACT

In this paper, we inspect the impact of bank-specific, industry-specific and macroeconomic variables on the financial performance of commercial banks operating in Gulf Cooperation Council (GCC) countries. We consider the stable panel statistics of 62 commercial banks from 2011Q1–2017Q4. The study applies a PCSE technique to a balanced panel data set. In light of the empirical results, the study shows that there is a significant negative impact of efficiency, credit risk, diversification and concentration ratio on all the performance measures. The coefficient of the capital adequacy ratio positively affects all the bank performance measures. The study also concluded that the macroeconomic indicators influence the bank’s financial performance measures.

KEYWORDS:

• Financial performance
• commercial banks
• GCC countries
• PCSE technique

JEL CLASSIFICATION:

• C23
• G21

Disclosure statement

No potential conflict of interest was reported by the authors.