The Determinants of the UAE Commercial Banks' Performance

Abstract

This paper compares the determinants of bank performance between national and foreign commercial banks in UAE. It also compares the relative importance of each determinant on bank performance in the two sets of banks. This paper adopts two regression models. The results indicate that the most significant determinants of the national banks' performance were banks' size and banks' portfolio composition. Variables which had been thought to play a major role, including labor productivity, capitalization, liquidity and economic conditions, were found to be less significant. It is also found that the most significant determinants of the foreign banks' performance were capital productivity, capitalization, leverage, and economic conditions. Variables had less significant impact on foreign banks' performance were banks' portfolio composition, liquidity, concentration and costs.

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