Determinants of Profitability in Commercial Banks: a Field Study in a Sample of the Iraqi Private Commercial Banks

The present study examines the analysis of bank profitability determinants in the private banking sector of Iraq which represents a rate of return on assets (ROA) that are most widely used in this area. The period between 2010 and 2014 (five years) has been chosen for the study due to this being when the global economic crisis happened which caused the bankruptcy of quite a few public and private banks in the world, in addition to causing substantial changes in the global commercial banking sector like re-owning or merging banks. All these reasons have influenced the commercial banking sector. The focus of the analysis is on three factors: degree of financial leverage, the rate of income tax, and the capital adequacy for ten operating commercial banks in the private sector of Iraq. The results of the three factors, as independent variables with the rate of return on assets as the dependent variable, have been studied. Also, the effects of the variables have been analyzed to identify the impact of trends and changes of many of the positive and negative fluctuations that occur in the profitability of banks and the role of these variables to enable the government to support the sector.