The Effect of Bank Size on Financial Performance: A Case Study on Kuwaiti Banks

Mansour S. AlFadhli, Musaed Sulaiman AlAli

Abstract


Bank’s assets size effect on the financial performance of banks has always been a controversial topic among researchers, where some of them sees that big bank enjoys economy of scale resulting in less overhead expenses and thus leading to a better financial performance than smaller banks. Others see that large banks suffer from bureaucracy which makes them slower in responding to economic changes resulting in a lower profitability. This study is mainly set to examine the effect of bank’s assets size on both return on assets (ROA) and return on equities (ROE) as proxies of bank financial performance. Using the data of 10 Kuwaiti banks over the period 2008-2018, results show that banks assets size had an inverse relation with profitability but that relation was statistically insignificant. On the other hand, results showed a statistically significant direct relation between shareholder’s equities and bank profitability.

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Copyright (c) 2021 Musaed Sulaiman AlAli

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This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.