The Effect of Capital Adequacy on Profitability: A Comparative Study Between Samba and Saab Banks of Saudi Arabia (original) (raw)

Abstract

This study is aimed at finding out the effect of capital Adequacy on profitability between two banks SAMBA and SABB. The necessary data used for analysis were collected from secondary sources. A descriptive analysis was used in testing the hypotheses. Results indicated that, Model 1 SABB bank shows a low positive correlation relationship between the ROA and ROE and a high positive relationship between ROA and CCA, ECA, TCA, CIR, DE. A low negative relationship between ROA and TRC, BS, AG, AL. The ROE has a positive relationship with CCA, ECA, TCA, TRC, BS. A negative relationship between ROE and CIR, AG, AL, DA. Furthermore, Model 2 SAMBA bank shows a high positive correlation relationship between ROA and ROE and a positive relationship between ROA and DE. A negative relationship between ROA and CCA, ECA, TCA, CIR, TRC, BS, AG, AL. A positive relationship between ROE and CIR, DE, and a negative relationship with CCA, ECA, TCA, TRC, BS, AG, AL. The authors suggest that more empirical...

Loading...

Loading Preview

Sorry, preview is currently unavailable. You can download the paper by clicking the button above.

References (12)

  1. Alalaya, M. and Al Khattab, S.A. 2015. "A Case Study in Business Market: Banks' Profitability: Evidence from Jordanian Commercial Banks (2002-2015)", International Journal of Business Management and Economic Research, 6 (4), pp. 204-213.
  2. Ali, S.A.2016. "Determinants of banks' profitability-the case of Jordan", Investment Management and Financial Innovations, 13(1). Pp.84-91,doi:10.21511/imfi.
  3. Ben Moussa, M. A.2013."Impact of capital on financial performance of banks: the case of Tunisia", Banks and Bank Systems, Volume 8, Issue 4, 2013.pp.47-54.
  4. Căpraru, B. and Ihnatov, I. 2015. "Determinants of bank's profitability in EU15", Scientific Annals of the AlexandruIoanCuza", 62 (1), pp. 93-101.
  5. David, U. And Osemwegie, M.2016"Capital Adequacy and Financial Performance of Banks in Nigeria: Empirical Evidence Based on the Fgls Estimator", European Scientific Journal,vol.12..doi:10.19044/esj.2016.v12n25.p.295
  6. Joseph, K. S. and Tabitha N. 2016, "Effect of Capital on the Financial Performance of Commercial Banks in Kenya" Asian Journal of Business and Management, Vol.4, No.5.pp221-238
  7. Ikpefan, O. 2013."A.Capital adequacy, management and performance in the Nigerian commercial bank (1986 -2006)".African Journal of Business Management, Vol. 7(30), pp. 2938-2950.
  8. Rufo, M. and John P. R. 2017."The Effect of Credit Risk and Capital Adequacy on the Profitability of Rural Banks in the Philippines", Scientific Annals of Economics and Business. Volume 64, Issue 1. Pp.83-96. DOI: https://doi.org/10.1515/saeb-2017-0006
  9. SABB Bank Financial Statements, 2010-2015. http://www.sabb.com/en/about-sabb/investor- SAMBA Bank Annual Financial Reports, 2010-2015. http://www.samba.com/en/pdf/financial- reports/Financial_Statement_Q1_2016_En.pdf.
  10. Siti, N. Y.1, Nusaibah, M and Kazuhiro, O.2016,"Financial Performance and Economic Impact on Capital Adequacy Ratio in Japan", International Journal of Business and Management, Vol. 11, No. 4; 2016.pp.14-21.
  11. Torbira, L. Land Zaagha, A. S. 2016."Capital Adequacy Measures and Bank Financial Performance in Nigeria: A Cointegration Analysis",Journal of Finance and Economic Research Vol. 3 . No. 1.pp.15-34.
  12. Valentina, F. Calvin M and Liliana S. 2009 "The Determinants of Commercial Bank Profitability in Sub- Saharan Africa",International Monetary Fund WP/09/15, IMF Working Paper African Department.pp.2-30.