Unit:
Κατεύθυνση Διοικητική Επιχειρήσεων και ΤραπεζώνLibrary of the Faculty of Economics and of the Faculty of Business Administration
Author:
Lampropoulos Konstantinos
Supervisors info:
Κωνσταντίνος Λοΐζος, Εντεταλμένος Διδασκαλίας, ΕΚΠΑ
Original Title:
Οι συνιστώσες της κερδοφορίας των τραπεζών. Εμπειρική έρευνα στην ζώνη του ευρώ.
Translated title:
The determinants of bank profitability. Empirical study in the Eurozone.
Summary:
The purpose of this paper is to examine the relationship between the bank-specific characteristics and macroeconomic determinants with the profitability in the financial sector. In this context, we provide an overview of relevant theoretical and empirical studies. The controversial results of the bibliography caused a vague understanding about the factors that affect the bank profitability and, consequently, the growing interest in the issue. At the same time, we are studying the macroeconomic environment of the Eurozone for the years 2007-2018 in order to achieve the optimal interpretation of the results. In the empirical analysis we build an econometric model and perform a linear regression on panel data of 10 Eurozone countries containing 258 observations. The dataset has been collected from the International Monetary Fund base. All the explanatory variables we use in the econometric model are statistically significant in explaining profitability. The findings of the regression show that the GDP growth and the inflation rate are important determinants of bank profitability in Europe, while losses from non-performing loans, operating expenses and rising of interest rates lead to lower levels of profitability. We also conclude that, unlike more regular periods, the relationship between banks' profitability and liquidity ratios is positive. Financial institutions with high liquidity ratios were less affected by the liquidity problems which arose as a result of the debt crisis. Finally, the findings on the size of the financial system are significant. We find that countries with an enlarged financial sector in relation to their GDP have faced greater economic losses because of the correlation between the bank’s total assets and systemic risks.
Main subject category:
Social, Political and Economic sciences
Keywords:
Banks, efficiency, profitability, effectiveness
