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<p>This research focuses on how the profitability of Palestinian banking system is affected by political stability. In addition, the study considers the effect of selected macroeconomic factors such as, inflation, economic growth, credit facility and banks size (asset) on banking profitability. The profitability is measured by returns on equity (ROE) and returns on assets (ROA). Data are extracted from the World Bank database and Palestinian Monetary Authority (PMA) statistics covering the period (1997–2023). Based on the ARDL technique, the results reveal that political instability is statistically and negatively affecting banks profitability in both long-run and short-term. It is also shown that economic growth positively and statistically affects the profitability of banks in Palestine. The variables used explain around 75% of the variation in the ROA and around 84% of the variation in ROE. The research provides valuable perspectives for decision-makers, regulators and interested parties regarding augmenting the banking system’s performance in Palestine.</p>

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Political instability and banking performance: evidence from Palestine

  • 期刊论文

  • 发表日期：

    2026年3月31日

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  • Mohanad Ismael,
  • Shaker Sarsour,
  • Tareq Ashour

摘要

This research focuses on how the profitability of Palestinian banking system is affected by political stability. In addition, the study considers the effect of selected macroeconomic factors such as, inflation, economic growth, credit facility and banks size (asset) on banking profitability. The profitability is measured by returns on equity (ROE) and returns on assets (ROA). Data are extracted from the World Bank database and Palestinian Monetary Authority (PMA) statistics covering the period (1997–2023). Based on the ARDL technique, the results reveal that political instability is statistically and negatively affecting banks profitability in both long-run and short-term. It is also shown that economic growth positively and statistically affects the profitability of banks in Palestine. The variables used explain around 75% of the variation in the ROA and around 84% of the variation in ROE. The research provides valuable perspectives for decision-makers, regulators and interested parties regarding augmenting the banking system’s performance in Palestine.