Wendy Peterson Case (Case Analysis)

Sample Solution

hange in the environment they were operating in, which had a direct effect on their performance. However, despite the massive structural changes and the significant increase of competition in the U.K financial services sector in the recent years, the U.K banking sector remains relatively under researched (Drake, 2001). In most studies the focus is either on financial performance of U.K major banks or building societies performance. The purpose of this study is to examine the internal (i.e. banks characteristics) and external (i.e. macroeconomics and financial structure) factors that affect performance of U.K owned banks over the last years.

1.2 Methodology and Data:

This study employs a multiple regression model to examine the main determinants of commercial banks profitability and net interest margin in the U.K. A single equation framework is employed in this study i.e. the effect of bank – specific, industry- specific and macroeconomic determinants of bank profitability and net interest margin. A similar approach was adopted by Bourke (1989), Molyneux and Thornton (1992), Nigo (2006), Barajas et al., (2000) among various theory. The study uses unbalanced panel data collected from bank scope database and the Bank of England (online).The data in this study is composed of balance sheet and income statements of commercial banks operating in the U.K.

1.3 Structure of the Study:

The study has been divided into six chapters and they are organized as follows: Chapter 2 reviews the literature and past statistics along with some key determinant that have been used in