Econometric Analysis for Analyzing the Impact of Inflation and Exchange Rate on the Financial Performance of Commercial Banks in Palestine
Date
2025-04-30
Authors
Bayyoud Mohammed
Islam KM Anwarul
Barakat Firas
Nurjahan Monira
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Publisher
International Research Journal of Multidisciplinary Scope (IRJMS)
Abstract
This study investigates the impact of inflation and exchange rate fluctuations on the financial performance of commercial banks in Palestine. Using econometric analysis, the research examines data from 13 commercial banks over the period 2013–2017, employing key performance indicators such as Return on Assets (ROA), Return on Equity (ROE), and the Liquid Assets to Total Assets (LATTA) ratio. The findings reveal a significant positive relationship between inflation and financial performance, indicating that Palestinian banks effectively adapt to inflationary environments to enhance profitability. Conversely, exchange rate fluctuations have a significant negative effect on ROA, suggesting that currency instability poses challenges to financial stability. These results highlight the need for strategic policies to mitigate exchange rate risks while capitalizing on inflation-driven opportunities. The study provides critical insights for policymakers, regulators, and bank managers, emphasizing the importance of financial resilience in an unstable economic landscape.
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Citation
Bayyoud, M., Islam, K. M. A., Barakat, F. S. Q., & Monira, N. A. (2025). Econometric analysis for analyzing the impact of inflation and exchange rate on the financial performance of commercial banks in Palestine. International Research Journal of Multidisciplinary Scope (IRJMS), 6(2), 359–371. https://doi.org/10.47857/irjms.2025.v06i02.03829