Academic journal article International Review of Management and Business Research

Determinants of Banks Performance: Viewing Test by Cognitive Mapping Technique: A Case of Biat

Academic journal article International Review of Management and Business Research

Determinants of Banks Performance: Viewing Test by Cognitive Mapping Technique: A Case of Biat

Article excerpt


The structure of the banking system has undergone many changes since the eighties. These changes are the result of adaptation to the new order of the bank's financial markets marked by an opening of markets has resulted in increased competition. As part of such restructuring banking systems, understand "the banking performance" and "its determinants" issues becomes important. The literature review showed that "the banking performance" is represented mainly by quantitative or quantifiable such as financial indicators (ROA, ROE, etc.). The same situation is to be found when studying "The determinants of bank performance." Indeed, the literature holds primarily internal or external variables quantitative or quantifiable to explain bank performance. Although these account for bank performance, we believe they are incomplete and therefore insufficient. For our part, we assume that the performance of a bank, as a multi-product company (or multi), which operates in an uncertain and volatile Stiroh and Rumble (2006) is probably affected not only by internal variables of a quantitative nature (eg financial ratios) but also by the internal variables of a qualitative nature (eg: variables related activities, managerial preferences etc.). This position has two consequences. Firstly, to address the issue of the performance of a bank, it is necessary to refer to a global model that integrates financial, organizational and environmental. In addition, it is necessary that this model takes into account the interactions between each of these aspects since bank must be designed as a system with functions or multiple determinants that interact among themselves and with the environment Beck, Kunt and Levine (2003). In this context, the objective of this study is to propose a system model that is able to integrate all of the interrelationships or links which connect the banking performance and its determinants. To achieve our goal, we built the model "OPERA-BANK". This model is a transposition of "OPERA" is a generic model intended for the diagnosis of a non-financial company by (Cossette and Audet 1994). Within the OPERA model, the model-BANK OPERA creates and uses its own dimensions and variables taking into account the special nature of banks. First we will discuss the characteristics of model dimensions BANK-OPERA before exploring the links between these dimensions.

Literature Review

Bank performance is usually measured by return on assets (ROA), return on equity (ROE) or the net interest margin (NIM) and is a function of internal and external determinants. Internal determinants are also sometimes called microeconomic determinants or inherent performance, while external determinants are variables that reflect economic and legal environment in which the bank operates. Many studies have attempted to explain the contribution of a particular variable on the performance of banks. It should be noted that very often, the authors found different results even contradictory. This is mainly due to the different data they use, which covers different areas and periods. Thus, some authors have studied the performance data from several countries, such Molyneux &Thornton (1992), Kunt & Huizinga (1999), Abreu & Mendes (2002), Goddard, Molyneux & Wilson (2004) and Athanasoglou, Delis, & Staikouras (2006). Others such as Berger, Hanweck and Humphrey (1987) (banking system in the United States), Berger, Hanweck andHumphrey (1987), (Colombia), Mamatzakis and Remoundos (2003) (Greece) and Herrero, Gavilá and Santabárbara (2009) (China) are interested in specific countries.

Determinants of performance The internal determinants


As with many variables, the impact of size on bank performance is hotly debated among researchers. It is possible to divide them into three groups: those who believe that size has a positive impact on performance, those who find a negative impact, and those for whom the impact is not significant. …

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