African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4188

Full Length Research Paper

An empirical study on banks profitability in the KSA: A co-integration approach

  Omar Masood¹, Bora Aktan2* and Sahil Chaudhary3      
  1University of East London, Business School, Docklands Campus, London, United Kingdom. 2Yasar University Faculty of Economics and Administrative Sciences, Selcuk Yasar Campus, Bornova, Izmir, Turkey. ³S.R.K.N.E.C. RTM Nagpur University, Nagpur, India.
Email: [email protected]

  •  Accepted: 09 June 2009
  •  Published: 31 August 2009

Abstract

 

This study aims to give the analysis of the determinants of banks’ profitability in the Kingdom of Saudi Arabia (KSA) over the period 1999-2007. This paper investigates the co-integration and causal relationship between return of assets (ROA) and return of equity (ROE) of Saudi banks. The analysis employs Augmented Dickey Fuller (ADF) test, Johansen’s cointegration test, Granger causality test. Analyzing the cointegration and other tests on Saudi Arabian banking sector over the study period, the relationships between the two variables are examined. The empirical results have found strong evidence that the variables are co-integrated.

Key words:  Banking, bank profitability, return on assets, return on equity, co-integration, KSA.

Copyright © 2024 Author(s) retain the copyright of this article.

This article is published under the terms of the Creative Commons Attribution License 4.0

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