DETERMINANTS OF COMMERCIAL BANKS' PROFITABILITY AND IMPORTANCE OF REMITTANCE IN LEBANESE BANKS

For developing countries, it is important to have effective functioning in order to enable the banking sector to grow. This study examines the factors determining banking profitability in Lebanon as a developing country by primarily investigating the effects of remittances (REM), return on average assets (ROA), and capital adequacy (CA), on return on equity (ROE) in Lebanon. The annual data cover 13 banks in the period between 2008 and 2019. According to the results of the model estimated through the System Generalized Moments Estimator, REM, ROA, and CA variables have positive coefficients and are statistically significant in explaining ROE. The findings show that the indicators related to the banking sector, such as ROA and CA, have more influence on the return on equity in Lebanon than remittances.