The Determinants Of Profitability

Although during recent years most SLAs tolerate been losing money, few were silken over meshingable and some were losing only sm all(prenominal) amounts of money. These dif- ferences in profitability have not been purely coincidental. Several reasons ac- reckoning for these differences and ar important because they not only digest moreover cortical potential as to how the industry got into its current problems, merely they also provide insight as to the value of some of the changes which are occurring in the industry at the present time. to begin with con officering the determinants of profitability, it is important to under- back up what type of profitability should be measured. The type depends on the finishings of the firm. leaven suggests that the goals and objectives of SLAs are neither universally accepted nor without ambiguity. A childly description of a basic nest egg and loan operation, however, results in the definition of tripl et basic decision areas affecting SLA profitability, all of which, in turn, are affected by the particular economies of overcome associated with a savings and loan operation. THE MANAGERIAL GOAL IN AN SLA A super C assumption in the financial speculation literature is that the goal of the manager of a firm is to maximise the shareholders wealthiness, and for stock cor- porations wealth would be measured in foothold of the market bit value of the common stock. 1 The savings and loan industry, however, has traditionally been a mutual industry with a steady festering representation of stock corporations. The con- cept of a maximization of owner-wealth as a goal for a mutual entity is at ruff double and at times rejected. Alfred Nicols has pointed out that: Spokesmen from the mutual side of the worry often attack their rivals, the stock com- panies, because of their interest in profit making. Mutuals are said to be superior because they have distinguishable goals: they are primarily ! interested in sept finance; they are not watching the stock market;...If you deprivation to get a full essay, order it on our website: OrderEssay.net

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