DETERMINANTS OF BANKS' PROFITABILITY: A COMPARATIVE ANALYSIS BETWEEN MALAYSIA AND SOUTH AFRICA

ABSTRACT The profitability of banks has been an important subject and a major concern for investors, researchers, and regulatory bodies. This study aims to determine the factors that affect the profitability of banks in Malaysia and South Africa, utilizing data from the Thomson Reuters database, the world bank database, and financial statements of selected banks between 2008 to 2020. Besides, by employing a multiple regression analysis, bank size and non-performing loans were found to exert positive and significant effects on South African Bank's ROA metrics. As with Malaysia, a negative relationship was found between non-performing loans, capital adequacy ratio, Gross domestic product, and banks’ return on asset ratios, while the results of panel data analysis show that capital adequacy ratio has a positive and significant relationship with profitability and bank size also has a negative and significant effect on profitability. The study draws practical and managerial implications relevant to the operational efficiency of banks in both countries. Keywords: Nonperforming loans, Profitability (ROA), Capital Adequacy Ratio, Malaysia, South Afric