Thesis (MSC) - Cyprus International University. Institute of Graduate Studies and Research International Banking and Finance Department

Includes bibliography (sheets 66-72)

ABSTRACT Saudi Arabia is still one of the significant country that conventional and Islamic banks co-exist together; they have both been regulated by Autonomous Authority which is known as SAMA (Saudi Arabia monetary authority). The study investigates the effects of liquidity, capital, deposits, and GDP on bank profitability. Annual data from 1995 to 2020 are used to cover the entire commercial banks in Saudi Arabia. To generate bank profitability index, three distinct indexes were used to generate a bank profitability index (return on assets, return on equity, and net interest margin). An improved ARDL model with more specifically bound technique is employed. Moreover, several interesting results were revealed in this research by answering the four questions were prepared; first, bank capital has a positive and significant impact on bank profitability in Saudi Arabia for long and short terms. Secondly, the long-range estimates indicated that liquidity has a positive relationship with bank profitability. It was also revealed that liquidity has a negative short-range relationship with bank profitability in Saudi Arabia. Third, the case for deposit had a positive short-range impact on bank profitability. On the other hand deposit has a long-range negative impact on bank profitability also. Finally, the estimator explicitly pointed that GDP per capita had a long range positive impact on bank profitability index in Saudi Arabia, while it's had a negative relationship to it in short term. Based on the findings of our research, various positive policies have been proposed for Saudi policymakers, which are presented in the concluding section.