Investigating the Determinants of Bank Performance in South Africa: A Panel Data Analysis | Chapter 2 | Modern Perspectives in Economics, Business and Management Vol. 8

According to the World Bank's 2017 first quarter report, South Africa has the largest economy in Africa and ranks 32nd in the world in terms of Gross Domestic Product (GDP). Previous economic disasters, such as the global financial crisis of 2008, the insolvency of all Cyprus banks in 2013, and Standard & Poor's (S&P) downgrading of South African banks to junk status in 2017, have driven the need for banks to be more strictly regulated. Using a panel of selected banks representing roughly 80% of total bank assets in South Africa, the major purpose of this research was to investigate the determinants of bank performance in the context of bank-specific variables, industry-related factors, and macroeconomic effects. According to the conclusions of the study, which used random effects panel data analysis, non-performing loans, capital adequacy, and GDP market price are the key drivers of bank performance in South Africa. The advancement of South Africa's financial system necessitates proper control of these elements. The findings suggest that the strength of the economy influences bank profitability in South Africa, and that bank ROA influences economic growth as measured by the country's GDP.

Author (S) Details

Emmanuel Lawa
Department of Applied Management, Durban University of Technology, Pietermaritzburg, South Africa.

Luther-King Junior Zogli
Department of Applied Management, Durban University of Technology, Pietermaritzburg, South Africa.

Bongani Innocent Dlamini
Department of Applied Management, Durban University of Technology, Pietermaritzburg, South Africa.

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