The Political Crisis and Bank Financial Performance: Evidence from the Middle East

Abstract

The political crisis happened in the Middle East and still continues in some countries affected its economicindicators. Due to the importance of banks in every economy, this study examines the impact of political crisisand bank internal factors on financial performance of 61 banks in Bahrain, Egypt, Syria and Yemen during theperiod 2004 – 2014 using financial ratio analysis technique. The effect of political crisis on bank performance isnegative. The findings also state that financial performance of selected countries’ banks is affected positively bycapital adequacy, bank size, asset management and operating efficiency. On the other hand, the factors of creditrisk, asset quality and overheads have a negative impact on this performance. However, the ratios ofmanagement quality, capital ratio, cost to income ratio, deposits and liquidity have no significant impact onROAA.Keywords: Financial Performance, Political Crisis, Middle East, Return on Assets.