oddard Et Al (2004) performed a study on 6 European Counties which constituted of 665 banks on the Determinants of profitability in European banks between 1992- 1998.A cross sectional and dynamic panel model was employed in the study. The result of the study suggested that total asset and capital to asset ratio had a positive relation with profitability. The results also show that there is an increase in abnormal profit despite intensifying competition. The study also explains that if abnormal profit is earned by a bank in the current year, its expected profit from the following year should include a healthy amount of current year’s abnormal profit despite intense competition.

Demerguc – kunt and Huizinga (1999) perform a comprehensive study to examine the determinants of bank profitability and interest margin using bank level data for 80 countries for the period between 1988-1995.The variables used in this study includes several factors accounting for bank characteristic macro-economic condition, taxation, financial structure, legal indicators and regulations. The results of this study suggest that a large ratio of banks assets to GDP and a low market concentration ratio lead to low margin and profits. A high margin and profit is maintained by foreign banks compared to domestic banks in developing countries, while in developed countries the opposite prevails.

Bashir (2000) examines the determinants of Islamic bank’s performance across 8 Middle Eastern countries for the period of 1993 – 1998.The study uses several internal and external factors to predict profitability and efficiencies .The results suggest that a higher leverage and large loans to assets ratios leads to higher profitability for variables controlling, for controlling macro-economic environment, taxation and financial situation. The study also reveals that foreign-owned banks tend to be more profitable than domestic banks. This study also reveals that taxation has a negative impact on bank profitability, while macroeconomic setting and stock market development has a positive impact on profitability.