Bank specific macroeconomic and industry specific determinants of bank performance and risk. The case of Kazakhstan

Abstract

Aftermath the global financial crisis many of the superior, in economic terms, or as many call them, developed economies struggled with the problems that they themselves have accumulated during pre-financial crisis times neglecting seemingly obvious growing financial problems. The crisis hit strong, leaving these, seemingly, developed countries in a condition when they were not able to stand still and hold the blow. This paper, however, examines the condition after and during the financial crisis of the performance of banking industry in the transitional economy of Kazakhstan. In a broad spectrum, our focus in this paper is the effect of risk and growth on the performance. As these two variables are, happen to make the most contributing and explaining the performance factors. The banking industry is the main locomotive or the domain of the developing countries' economies, or the countries recently switched from planned to open market conditions. Therefore, the reforms and many economic and political actions from the governing structures particularly in transitional economy of Kazakhstan are directed first to improve and help exactly the banking industry as it appears to be the core point or the veins of the country economy development resembling the whole state economic perspective. This paper examines quarterly based panel data over ten years from the beginning of the crisis of 2008y up until to the 2017y of ten Kazakhstani banks. For the measure of the risk, we apply Z-score that explains the financial stability that affects the performance. As for the performance itself, accounting terms like ROA and NIM are taken with the consideration of macroeconomic and bank specific variables. We expect that the findings will help clarify the necessities for the enhancement of policy implications, regulation and supervision of different aspects of the risk possibilities in the banking industry that might help improve the general state economic condition.