Assessing profit performance efficiency - an evidence from banking sector in Sultanate of Oman

Abstract

Banking sector has undergone major changes in the mode of operation and the activities undertaken in the normal course of business.There has been a complete overhaul in banking activities wherein banks have emerged from conventional lending and borrowing business to financial conglomerates.This dynamism in banking industry has trigerred paradigm shift in academic and applied research. Analysis of performance of banking industry has always been an area of interest not only among the academicians but also among the analysts and practitioners. Here in this study a different and unconventional approach to assess the efficiency of profit management for banks has been developed. This approach, is named as Profit Identity Approach. The primary objective of the study is two fold. First, to assess the overall development of banking industry in Oman and second to assess the profit performance efficiency with the application of Profit Identity Approach. The study reveals that the time series data showed considerable movement over the period. It can be established from the results that spread and burden are the significant variables, which influence the profit of the banks in Oman. Further, this study suggest that banks react mostly in a comparable manner for the profitablity performance over the period of time.