The Analysis of Bank-Specific Variables on Commercial Bank Profitability in European and African Currency Unions

It is beyond contestation that commercial banking is a vital service in national and international economies. This sets sets out to investigate the effect of certain bankspecific variables on the return on average assets of banks whose business activities are in common-currency monetary unions. The performance of commercial banks in the Eurozone, Central African CFA Franc and West African CFA Franc zones are assessed to ascertain their profitability over a ten year span encompassing the Eurozone sovereign debt crisis and the post crisis recovery. Data was extracted from annual reports covering the 2011-2020 period and correlation and panel data analysis were used to determine the impacts of readily-available CAMEL independent variables – LAT (liquid assets to total deposits and borrowings), NIM (net interest margin), BG (bank governance) and LLR (loan loss reserves-to-gross loans) ratio – in order to determine their impact on ROAA (return on average assets). Regarding our empirical analysis, all of the banks performed well during the length of the study.