National Crises and Bank Profitability in Lebanon: Evidence from the Financial Crisis, COVID-19, and the Beirut Port Explosion
DOI:
https://doi.org/10.66461/qxwg9n35Keywords:
Bank Profitability, Lebanese Banking Sector, Financial Crisis, COVID-19, Beirut Port Explosion, Capital Adequacy, Panel Data, ROA, ROEAbstract
This study examines the impact of major national crises on Lebanese bank profitability, focusing on the Lebanese financial crisis, COVID-19, and the Beirut Port explosion. It also investigates whether capital adequacy moderates the relationship between crises and bank profitability. The study adopts a quantitative explanatory research design using balanced panel data from five Lebanese commercial banks over the period 2017–2023, generating 35 bank-year observations. Profitability is measured using the return on assets (ROA) and return on equity (ROE). The study employs pooled ordinary least squares, fixed effects, and random effects panel regression models, along with moderation analysis, to assess the conditional role of capital adequacy. The results show that The Lebanese financial crisis and COVID-19 significantly reduced both ROA and ROE, indicating that systemic financial instability and pandemic-related disruption weakened Lebanese banks’ profitability. The Beirut Port explosion showed weaker and less consistent direct effects, although its negative impact became more evident in the moderation model. Capital adequacy had a positive direct effect on profitability but did not act as a consistent buffer. It did not significantly moderate the financial crisis–profitability relationship, negatively moderated the COVID-19 profitability relationship, and positively moderated the Beirut Port explosion profitability relationship. This study contributes to the banking and crisis literature by examining three overlapping national shocks in Lebanon within one empirical framework. It extends the evidence on bank profitability in fragile and crisis-affected economies by showing that the role of capital adequacy is crisis-specific rather than universally protective.
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