The Role of Real Estate Investment in the Profitability of Libyan Commercial Banks: A Study of the Tripoli Branch of the Savings and Real Estate Investment Bank

Abstract

This study aimed to measure and test the impact of real estate investment across its various dimensions (residential real estate financing, commercial and direct real estate investment, and real estate financing formulas) on banking profitability at the Savings and Real Estate Investment Bank (Tripoli Branch), under the control and moderating variables represented by credit risk, default volume, branch size, and available liquidity, applied to the indicators of return on assets, return on equity, and net profit margin. To achieve the study's objectives and test its hypotheses, the descriptive-analytical approach was adopted, and the questionnaire was used as a primary tool to collect field data from a sample that included managers, department heads, and specialized employees at the branch. The data was statistically processed using the Statistical Package for the Social Sciences (SPSS) software.

The study concluded that there is a direct, statistically significant impact of real estate investment across its dimensions on overall banking profitability, as the regression model explained a significant proportion of the changes occurring in profitability. The commercial and direct real estate investment dimension occupied the most prominent rank in maximizing the return on equity (ROE), followed by the residential real estate financing dimension in raising the return on assets (ROA). The results also proved the existence of a statistically significant moderating effect for the variables of (credit risk and default volume, and branch size and available liquidity) in directing and modifying the strength of the relationship between real estate investment and banking profitability.

In light of this, the study recommended the necessity of strategic expansion in investment and commercial real estate financing with regular cash flows, activating precise systems to control credit risk and limit non-performing loans, while committing to periodic evaluation and documentation of mortgages and real estate controls in accordance with approved regulatory instructions.