An analysis of the influence of cost structure and market share to the profitability of selected universal banks for the years 1998-2005

• Main Authors: Arnuco, Elgin Roy M., Carpio, Matthew A., Catolico, Arianne Cecille A., Cornejo, Melanie Ann P.
• Format: text
• Language: English
• Published: Animo Repository 2007
• Subjects: Bank profits; Banks and banking; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14321
• Institution: De La Salle University

This study determined the influence of cost structure and market share variables to the profitability of top five (5) publicly listed banks from the years 1998 to 2005. The said variables are said to both had vital roles in influencing a bank's profitability during the duration of 1998 to 2005. The cost structure variables, which are cost of borrowings and the cost of labor, were regressed individually with Return on Assets and Return on Equity in the study. The market share variables, which are the total deposits and total loans, were also regressed individually with both Return on Assets and Return on Equity. Moreover, both the cost structure and market share variables were regressed aggregately with ROA and ROE to test whether the combination will provide significant results. After all the variables had been regressed individually and cumulatively, the proponents found out the results were to be analyzed on a per-bank basis. This means that the significance of the variables depended on the historical highlights, corporate practices and strategies of the bank. The results generated from the different statistical tests showed that the variables may or may not have an influence to the profitability. Tests that were utilized were linear and multiple linear regression, autocorrelation, heteroscedasticity and multicollinearity. To sum it up, the influence of cost structure and market share to the profitability of a bank was determined on a per-bank basis which also depended on some external and internal factors.