Determinants of Commercial Banks' Performance in Malawi: An Autoregressive Distributed Lag (ARDL) Approach

Lloyd George Banda; Lloyd George Banda

doi:10.3934/NAR.2021022

National Accounting Review

2021, Volume 3, Issue 4: 422-438. doi: 10.3934/NAR.2021022

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Research article

Determinants of Commercial Banks' Performance in Malawi: An Autoregressive Distributed Lag (ARDL) Approach

Lloyd George Banda ^,

Department of Pension and Insurance Supervision, Reserve Bank of Malawi, Henderson Street, Malawi

Received: 10 September 2021 Accepted: 06 December 2021 Published: 09 December 2021
JEL Codes: C22, G10, G17, G18, G21

There has been a monotonic increase in research investigating the performance of commercial banks across the globe. This is a recognition that the banking industry has a significant contribution to the service sector and national output. This paper examined the existence of the structure-conduct performance (SCP) and efficient market hypotheses by employing an autoregressive distributed lag (ARDL) approach for a period between 1990 and 2020. The study revealed the existed of both paradigms due to a strongly statistically positive and significant coefficients of bank concentration and the size of the banking sector using the computed composite profitability measure (CPM). The paper suggests various policy implications on internal and external determinants of commercial bank's performance.
- Malawi,
- PCA,
- total bank deposit,
- bank concentration ratio,
- STATA
Citation: Lloyd George Banda. Determinants of Commercial Banks' Performance in Malawi: An Autoregressive Distributed Lag (ARDL) Approach[J]. National Accounting Review, 2021, 3(4): 422-438. doi: 10.3934/NAR.2021022

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Abstract

There has been a monotonic increase in research investigating the performance of commercial banks across the globe. This is a recognition that the banking industry has a significant contribution to the service sector and national output. This paper examined the existence of the structure-conduct performance (SCP) and efficient market hypotheses by employing an autoregressive distributed lag (ARDL) approach for a period between 1990 and 2020. The study revealed the existed of both paradigms due to a strongly statistically positive and significant coefficients of bank concentration and the size of the banking sector using the computed composite profitability measure (CPM). The paper suggests various policy implications on internal and external determinants of commercial bank's performance.

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