Evaluating the Performance of Libyan Banks Using Return on Investment

Abstract

Return on Investment (ROI) is a financial ratio which commonly used to evaluate the overall performance of a company. Despite of the importance of ROI unfortunately not many Libyan banks use it to evaluate their performance. Most of Libyan banks use the result of income statements to evaluate their performance instead of other tools that use to evaluate performance of banks. This study will be focusing on the ROI. The objective of this research is to evaluate the performance of Libyan banks using ROI as a financial tool. The Libyan banks which involved in this research are: Alwahda bank, National Commercial bank, Commercial and Development bank, Mediterranean bank and Alejmaa Alarabi bank. In this research financial statements of the Libyan banks for period from 2005-2009 will be used to calculate the ROI. In general, the results of the ROI of the banks used in this research showed increase and then begin to decrease and then increase again. The results clearly indicate that the performance of Libyan banks is not stable depending on components of ROI.