Strategic Choice and Operational Performance: A comparative study of commercial banks in Oman
Abstract
The objective of this paper is to investigate various strategies
adopted by banks in the Sultanate of Oman and to explore how these
strategies may have helped these banks overcome different operational
difficulties during periods of crisis. The empirical analysis in this study
was done using binary logit regression technique with data from the
Bank Scope database. Data was drawn from the balance sheets and
income statements of commercial banks, and this data ranges from
December 1999 to December 2017. Data from 1999 to 2009 was used
for estimating the logit equations, and data from 2012 to 2017 was
used for testing the predictive ability of the model. From a strategy
point of view, our study of Omani banks focuses on the financial crises
of 2000-2001 and 2008-2009, and the model predictions for years
2012 to 2017 brings forth the following conclusion: In order to ensure
that a bank performs well (in terms of profit and asset growth), the
bank’s management should focus on capital account management,
interest spread management, good loan quality, and high loan-todeposit
ratios. Finally, we also found that cost management and
liquidity management are two areas of strategic choices that are not
particularly important.
