Investigating the Determinants of Bank Performance in South Africa: A Panel Data Analysis

South Africa has the largest economy in Africa, according to the World Bank's 2017 first quarter report, and ranks 32nd in the world in terms of Gross Domestic Product (GDP). Past economic catastrophes, such as the global financial crisis of 2008, the insolvency of all Cyprus banks in 2013, and Standard and Poor's (S&P) downgrading of South African banks to junk status in 2017, have prompted the need for banks to be rigorously regulated. The primary goal of this paper was to investigate the determinants of bank performance in the context of bank-specific variables, industry-related factors, and macroeconomic influences, using a panel of selected banks representing approximately 80% of total bank assets in South Africa. Non-performing loans, capital adequacy, and GDP market price are the primary predictors of bank performance in South Africa, according to the findings of the study, which were done using random effects panel data analysis. The progress of the banking system in South Africa requires effective management of these variables. The results imply that the strength of the economy affects the profitability of banks in South Africa, and that ROA of South African banks affects economic growth measured by the country’s GDP.