Volume 29, Issue 5, 2020
DOI: 10.24205/03276716.2020.1149
Variability of macroeconomic variables and their implications on the Commercial Banks’ Profit Sustainability in Morocco
Abstract
This study examined the macroeconomic variables impact on the Sustainable profitability
of commercial Banks in Morocco. The three profitability indicators (ROA, ROE, and NIM)
were utilized as the dependent variable in this study, while consumer price index (CPI),
GDP, total government debt (TGD), total revenue (TR), and total government expenditure
(TGE) were macroeconomic variables employed as independent variables. Annual data
covering the period from 2004 to 2018 was utilized and sourced from Federal Reserve
Bank of St. Louis. The ARDL Bound testing approach was employed to investigate the
cointegration, as well as the short and long-run causal relationship between the
dependent variable and independent variables. Our finding reveals that GDP and TGD
were found to have long-run causal relationship with ROA; GDP, TGD, and TR influences
ROE at the long-run; while, CPI, TGD, TR, and TGE shows a long-run causal relationship
with NIM. As for the short-run causal relationship, CPI, TGD, TR shows influence on ROA
in the short-run; influence of CPI, TGD, TR and TGE were found on the ROE in the shortrun; while, CPI, GDP, TGD, and TR had a short-run causal influence on NIM. Meanwhile,
our research also found that there is stable long-run relationship between the three
profitability indicators and the variables that has a significant long-run relationship with
them. This implies that the model can converge back to equilibrium in case of any shock
to the system. Conclusively, the study suggests some implications for the policy makers.
Keywords
Banking and Finance; Bank profitability; Sustainability; Macroeconomic factors; Morocco.