Determinants of bank profibality during the post-crisis period
Keywords
Loading...
Authors
Issue Date
2018-08-21
Language
en
Document type
Journal Title
Journal ISSN
Volume Title
Publisher
Title
ISSN
Volume
Issue
Startpage
Endpage
DOI
Abstract
In this paper we study the determinants of bank profitability in the post-crisis period for banks located in the Euro Area. Current literature has only focused on the pre-crisis and crisis period. Bank profitability is measured by the return on assets (ROA). Our determinants include bank-specific, industry-specific and macroeconomic variables. One of these industry-specific variables is stock-exchange ownership, which has only been included by Dietrich & Wanzenried (2011) so far. In order to investigate and account for the dynamic nature of the determinants we make use of the two step system-GMM estimator developed by Arellano and Bover (1995). Our results show that profits are persistent over time to a moderate extent. These findings indicate no large deviations from a perfect competitive market structure in the Euro Area. A bank’s capitalization shows a significant positive relationship with profits, whereas exposure to credit risk seems to have a significant negative effect on profitability. None of our industry-specific and macroeconomic variables showed a significant relationship with profitability. These findings emphasize the importance of internal factors in generating profits.
Keywords: Bank profitability, Financial Crisis, Euro Area, system-GMM estimator, Stock-exchange ownership
Description
Citation
Supervisor
Faculty
Faculteit der Managementwetenschappen