Determinants of banks’ profitability in Angola

Abstract

Purpose

The purpose of this paper is to analyze the factors that influence the profitability of 17 banks in Angola between 2010 and 2016, as low profitability weakens the ability and willingness of banks to finance the wider economy.

Design/methodology/approach

The paper conducts panel data analysis, using two measures of profitability: the return on average assets and the return on average equity. Several control variables were included concerning both bank-specific and macroeconomic characteristics which have not been considered in previous studies.

Findings

The authors conclude that several independent variables have an impact which is different from expected, especially regarding ownership, which shows positive statistically significant effect on banks’ profitability.

Originality/value

To the best of the authors’ knowledge, this is the first attempt to examine determinants of banks’ profitability in Angola, both internal and external, which have not been considered in previous studies.

Citation

Garcia, M.T.M. and Trindade, M.J. (2019), "Determinants of banks’ profitability in Angola", African Journal of Economic and Management Studies, Vol. 10 No. 1, pp. 116-128. https://doi.org/10.1108/AJEMS-06-2018-0161