Analyzing the Differential Impact of DuPont Model Components on Return on Equity - An applied study on The Bank of Syria and Overseas

Abstract

This study aims to analyze the differential impact of DuPont model components on Return on Equity (ROE) in the Bank of Syria and Overseas under the conditions of the Syrian crisis. The study is based on the bank’s annual financial data from 2007 to 2024 and adopts a descriptive–analytical approach supported by econometric analysis. Both simple linear regression and multiple linear regression models were employed; the former measures the individual effect of each DuPont component on ROE, while the latter assesses their relative and simultaneous effects.

The results of the simple linear regression revealed variations in both the direction and magnitude of the impact of the DuPont components on ROE. The multiple regression analysis indicated a clear inequality in their relative importance. Specifically, the Net Profit Margin emerged as the most influential determinant of ROE with a high level of statistical significance, reflecting the pivotal role of operating profitability and cost management efficiency in enhancing shareholders’ returns. In contrast, neither Asset Turnover nor the Equity Multiplier showed a statistically significant effect on ROE when included in the multiple regression model, suggesting their limited explanatory power during the crisis period.

The study concludes that DuPont model components do not exert equal effects on ROE in unstable banking environments, emphasizing the importance of focusing on operating profitability indicators when evaluating banks’ financial performance during crises. This research contributes to the financial and banking literature by providing empirical evidence from a banking environment exposed to exceptional conditions, while also offering practical insights to support managerial decision-making and enhance financial sustainability.