The Impact of Determinants of Commercial Banks' Profitability on Banking Sustainability

  • Sima Hassan Alshammari
  • Zahraa Kadhim Majeed
  • Rassol Abd Aljalil Mahdi
  • Mohammed Faez Hasan
Keywords: determinants of profitability, banking sustainability, inflation, market value added


The determinants of profitability are among the indicators affecting the performance of commercial banks and thus their sustainability, as they have in themselves become a problem facing banks considering the rapid changes in the banking world and its technologies. Therefore, the study aimed to identify the determinants of profitability and their impact on banking sustainability, as it adopted two external determinants, inflation and GDP. The gross domestic product and two internal determinants are the growth of deposits and loans. The research was applied to a sample of commercial banks listed on the Iraq Stock Exchange, represented by the selection of (8) banks, namely Baghdad, Iraqi Commercial, Middle East, Investment, Iraqi National, Credit, Sumer Commercial and the Iraqi Gulf, for the period 2005-2021, and used the descriptive analytical approach to variables with the aim of evaluating and measuring the independent variable (determinants) and the dependent variable (banking sustainability) represented by market value added and earnings per share using the statistical program (EViews V9) and the Panel Data application. Analysis was made according to the three models (aggregative regression model, fixed effects model, random effects model). According to this analysis, it was found that the determinants significantly affect banking sustainability indicators at a significance level of 5% and 10%. The study concluded the need to support the Iraqi banking sector by highlighting on indicators of banking sustainability; the weak and unstable banking system creates a turbulent environment that leads to a financial crisis that negatively affects the rest of the economic sectors.


AL Abdullah, M. J. M., Alyaseen, A. A. A. M., & Faez Hasan, M. (2023). Role of company's efficiency measure in achieving return: Iraq's private banks case. Technium Social Sciences Journal, 39, 377-392.
Al-Harbi, A. (2019). The determinants of conventional banks profitability in developing and underdeveloped OIC countries. Journal of Economics, Finance and Administrative Science, 24(47).
Al-Jafari, M. K., & Alchami, M. (2014). Determinants of bank profitability: Evidence from Syria. Journal of Applied Finance & Banking, 4(1), 17-45.
Constantin, A., & Gabriela, M. A. (2017). Econometric model for complex analyses and forecast of the gross domestic product. Annals of the "Constantin Brâncuşi" University of Târgu Jiu, Economy Series, 6, 54-60.
Doan, T.-T. T., & Bui, T. N. (2020). An empirical analysis of macroeconomic and bank-specific factors affecting profitability of Vietnam banks [Working Paper]. Growing Science.
Flayyih, H. H., & Hasan, M. F. (2023). Measuring the level of banking performance according to the requirements of comprehensive quality management: An application study. International Journal of Economics, Business and Solutios, 4(1), 41-52.
Hasan, M. F. (2022). Bank mergers and acquisitions trends under recent crises. Iconic Research and Engineering Journals, 6(2), 81-96.
Hasan, M. F., Hadi, H. S., & Jasim, N. A. H. (2021). The validity of Altman's models in predicting Iraqi private-banks soundness. Journal of Management and Accounting Studies, 9(01), 79-89.
Jain, P., & Sharma, B. (2023). Impact of green banking practices on sustainable environmental performance and profitability of private sector banks. International Journal of Social Ecology and Sustainable Development, 14(1), 1-19.
Jamel, L., & Mansour, S. (2018). Determinants of Tunisian banks profitability. International Journal of Business and Risk Management, 1(1), 17-27.
Karim, B. K., & Hichem, B.-K. (2009). Determinants of Islamic bank profitability in the MENA region. International Journal of Monetary Economics and Finance, 2(3/4), 409-426.
Kosmidou, K., Tanna, S., & Pasiouras, F. (2008). Determinants of profitability of domestic UK commercial banks: Panel evidence from the period 1995-2002 (Economics, Finance and Accounting Applied Research Working Paper Series No. RP08-4). Coventry University.
Mouftv, S. S. (2017). Sustainability practices and their effect on performance in the banking sector-A stakeholder approach [Doctoral dissertation, Brunel University London]. Brunel University Research Archive.
Ngepah, N., Silva, M. L. A., & Saba, C. S. (2022). The impact of commodity price shocks on banking system stability in developing countries. Economies, 10(4), 91.
Ramadan, I. Z., Kilani, Q. A., & Kaddumi, T. A. (2011). Determinants of bank profitability: Evidence from Jordan. International Journal of Academic Research, 3(4), 180-191.
Raza, H., Hamid, Z., Shah, S. A., & Khan, S. (2021). Firm and industry specific determinants of capital structure: Empirical evidence from the listed industrial sectors of Pakistan. Indian Journal of Economics and Business, 20(2), 397-414.
Rinkus, M. A. (2015). An exploratory study comparing mid-sized U.S. banks' and global banks' sustainability programs [Doctoral dissertation, Lawrence Technological University]. LTU Digital Commons.
Sarwar, B., Mustafa, G., Abid, A., & Ahmad, M. (2018). Internal and external determinants of profitability: A case of commercial banks of Pakistan. Paradigms, 12(1), 37-47.
Sartori, S., Fernanda, L., & Lucila, M. (2014). Sustainability, and sustainable development: A taxonomy in the field of literature. Ambiente & Sociedade, 17(1), 1-22.
Stankeviciene, J., & Nikonorova, M. (2014). Sustainable value creation in commercial banks during financial crisis. Procedia-Social and Behavioral Sciences, 156, 498-502.
Suppia, N. M. I., & Arshad, N. C. (2019). Bank specific characteristics and profitability of Islamic and conventional banks in Malaysia. International Journal, 4(1), 41-54.
Thenmozhi, M. (2000). Market value added and share price behavior: An empirical study of BSE Sensex companies. Delhi Business Review, 1(1), 1-12.
Witjaksana, B. (2019). Activity based management change order model-based economic value added through the effectiveness and efficiency to improve the financial performance of building construction projects in Surabaya City. Archives of Business Research, 7(7), 250-267.
Zhang, C., & Dong, L. (2011). Determinants of bank profitability: Evidence from the U.S. banking sector [Master's thesis, Simon Fraser University]. Summit Institutional Repository.
How to Cite
Alshammari, S. H., Majeed, Z. K., Mahdi, R. A. A., & Hasan, M. F. (2024). The Impact of Determinants of Commercial Banks’ Profitability on Banking Sustainability. European Journal of Science, Innovation and Technology, 4(2), 330-349. Retrieved from