Assessing the Impact of Internal, External, and Demographic Factors on Bank Performance: A Correlation Analysis

Abstract

A thorough quantitative correlation analysis of the internal (capital adequacy, liquidity risk, asset quality, and employee skills), external (consumer behavior, market competition, and economic conditions), and demographic (experience, age, gender, and education) factors affecting bank performance is carried out in this study. Pearson correlation coefficients are used in the study, which applies meta-analytic techniques to 127 empirical publications (2020–2024). Key findings show strong relationships: employee training improves customer satisfaction (r = 0.38, p < 0.01), liquidity risk has a negative influence on NIM (r = -0.35, p < 0.05), and capital adequacy positively correlates with ROA (r = 0.42, p < 0.01). Demographic considerations account for 19% of the adoption of digital transformation, while economic conditions enhance capital-performance links by 28%. The most important element is asset quality (0.62*** on Z-score), but liquidity risk is a serious concern (-0.47***). One of the limitations is the possibility of missing variables. To maximize stability and profitability, banks should give priority to asset quality, liquidity management, and staff training, according to practical consequences. The report offers bankers and regulators empirically supported insights to improve performance tactics.