International Journal of Economics and Financial Modelling

Market competition and bank performance - empirical evidence from the European Union banking sector

Candida Ferreira — 2025-03-14

The main aim of this paper is to empirically test the contribution of market competition to bank performance and the influence of the crises that affected the EU banking sector over the years 2006-2021. Using data sourced from the Moody’s Analytics BankFocus database, the paper presents the results obtained with panel fixed, random, and dynamic GMM estimations. Bank performance is proxied with two variables: bank profitability and bank capitalization. Bank profitability is measured with the return on equity ratio, and bank capitalization is represented with the equity to total assets ratio. Bank competition is measured with Boone indicators and Herfindahl-Hirschman Indices. These two competition measures are separately computed for banks’ profits, loans, and deposits. The findings suggest that competition, evaluated from an efficiency perspective, plays a more crucial role than market concentration in the banking sector in explaining bank performance. Furthermore, the profitability of banks does not appear to be directly linked to their traditional activities. The paper highlights the significant role of political and regulatory authorities in ensuring that legislation and conditions are in place to maintain bank market competition without exacerbating crisis risks while also fostering economic growth.

An assessment of the impact of non-performing loans and macroeconomic indicators on bank performance

Abraham Nii Adu Okine — 2025-06-13

The purpose is to explores the impact of NPLs and macroeconomic indicators on bank performance in Ghana. Non-performing loans pose significant challenge to banks, with detrimental implications for financial and economic stability. This study used secondary data obtained from financial reports of nine firms in Ghanaian, covering 2007 to 2021. The investigation focused on bank’s ROA and ROE as proxies for measuring performance, while NPLs, GDP, bank size, and inflation were adopted as predictor factors. The random effects model was employed, using Ordinary Least Squares and autoregressive methods. The outcomes show insignificant direct, and negative connection between NPLs and bank ROA and ROE respectively. Additionally, the study demonstrates that inflation rate and bank size posit statistically important inverse, and direct influence on ROA and ROE respectively. NPL does not influence bank’s ROE and ROA. Inflation and bank size have impact on performance. Considering the diverse influences of NPLs on financial metrics, and the significant impact of inflation and bank size on performance, policymakers and institutional managers must prioritize effective risk management, rigorous customer screening and close monitoring of macroeconomic conditions to ensure that strategic financial planning aligns with current economic environment for sustainable performance.

A comparative analysis of the impact of NPL on the performance of foreign banks compared to Indigenous banks operating in Ghana

Abraham Nii Adu Okine — 2025-11-03

This research presents a comparative examination of the impact of non-performing loans (NPLs) on the performance of foreign banks versus indigenous banks operating in Ghana, concentrating on the Return on Assets (ROA), Return on Equity (ROE), and Liquidity Ratio (LIQDR). Utilizing balanced panel data from 2007 to 2021, a panel fixed-effects estimation technique was employed via EViews 12 to examine credit risk heterogeneity across bank ownership structures. The findings indicate an inverse but statistically insignificant association between NPLs and performance indicators (ROA, ROE, and LIQDR) for indigenous banks. This outcome suggests their greater vulnerability to asset quality deterioration, possibly due to less robust risk management. Conversely, foreign banks exhibit a contradictory direct and statistically significant relationship between NPLs and both ROA and ROE, whereas the effect on LIQDR remains insignificant. This outcome implies that foreign banks leverage superior credit risk mitigation, robust capital buffers, or distinct operational efficiencies (e.g., aggressive write-off policies or high-yield lending) to absorb or manage the NPL impacts more effectively. This study offers original insights by empirically differentiating performance outcomes for foreign and local banks facing credit risk in an emerging market. Practically, these findings necessitate enhanced credit monitoring and capital reform for indigenous banks. Policymakers should also consider capacity-building support for local institutions. Future studies could scrutinize the mediating function of bank governance and specific macroprudential policies.

Capital market dynamics and economic growth trend in Nigeria

Abolarin, Akinwale Abdulrauf — 2025-11-04

This study investigates the dynamics of capital market growth and its impact on economic growth in Nigeria from 1990 to 2024, focusing on the contribution of the capital market to GDP, as well as the short-term and long-term effects on economic trends. Secondary data from reputable sources were analyzed using multiple linear regression approach, to quantify the influence of various capital market indicators, including total market capitalization, gross capital formation, and trading volumes, on GDP growth. Additionally, the study explores the role of counter-cyclical factors within the capital market across different business cycles, providing insights into how these dynamics can enhance economic resilience during downturns. The Short-Run Estimates found that (SMC) and (TMC) have a significant positive impact on Real Gross Domestic Product (RGDP); while the Long-Run Analysis suggests that a stronger stock market, measured by the All Share Index (ASI), is associated with a more robust economy, indicating it is a foundational component of sustained economic growth. The study demonstrates the significant influence of Nigeria's capital market dynamics on its economic growth The findings are expected to inform policymakers and market participants about the significance of capital market activities in fostering sustainable economic growth in Nigeria.

Analyzing sector performance and investment strategies: A decade of FTSE data

Ritvik Gupta — 2025-11-13

Data analysis techniques play a pivotal role in extracting meaningful insights from complex datasets, enabling informed decision-making across industries. In this project, we applied these techniques to analyze a decade of historical data from the FTSE (Financial Times Stock Exchange), a prominent index that tracks the performance of major UK-based companies across key sectors. Focusing on five critical sectors—Finance, Technology, Retail, Healthcare, and Basic Resources—we aimed to identify the most stable and least volatile investment opportunities for investors. By categorizing the sectors into Top 3, Middle 3, and Bottom 3 based on performance, time series analysis was utilized to uncover trends and patterns, testing various investment strategies such as buy-and-hold, Top 4, and equal-weight allocation across multiple frequencies, including yearly, bi-yearly, quarterly, and monthly. Through comprehensive visualizations and statistical analysis, we derived actionable insights to help investors optimize their strategies, minimize risk, and maximize returns in a dynamic market environment.