Employees’ Cost, Productivity and Profitability – An Empirical Study of Listed Banks in Saudi Arabia

This study is based on a total number of 10 listed banks operating in Saudi Arabia. This study is the outcome of mainly secondary data. These data were collected from the annual reports of the selected banks. For the empirical analysis, eight financial years ranging from 2005–2012 was selected. The main objective of the study was to critically examine the impact of productivity on profitability covering the specific objects like determinants of productivity performance and analyzing productivity performances. The study showed a strong relationship between productivity and profitability. Moreover, it is found that productivity of the selected banks has been influenced by staff expenses to operating expenses ratio, staff expenses to total assets ratio and staff expenses per employee. Further it is found that profitability of the selected banks has been influenced by profit per employee, staff expenses to total assets ratio and staff expenses per employee.