Revisiting bank profitability: A semi-parametric approach

Kanas, Angelos; Vasiliou, Dimitrios; Eriotis, Nikolaos

doi:10.1016/j.intfin.2011.10.003

Cited by 54 publications

(45 citation statements)

References 57 publications

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“…Previous studies have found a positive relationship between this variable and the banking sector profitability (Goddard et al, 2011;Kanas, Vasiliou, & Eriotis, 2012;Albertazzi & Gambacorta, 2009;Athanasoglou et al, 2006;Beckmann, 2007); improved market conditions are associated with a better quality of the loans portfolio and with an increase of net interest margin. The growth of credit demand raises interest rates, while liquidity abundance on the market reduces funding costs for banks; naturally, the worsening of economic conditions brings to an opposite result, compressing the banks' profit margins.…”

Section: Methodsmentioning

confidence: 89%

Determinants of Bank Profitability in the Euro Area: What Has Changed During the Recent Financial Crisis?

Rossi¹,

Borroni²,

Lippi³

et al. 2018

IBR

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During the recent financial crisis, bank profitability has become an element of strong concern for regulators and policymakers; in fact both self-financing strategies and capital increases -necessary to provide higher level of capitalization -rely on the ability of a bank to generate profits. However, the determinants of bank profitability, that seemed to be unequivocally identified by previous literature, appear to have changed under the effect of regulatory and competitive dynamics. We test this hypothesis on commercial, cooperative and saving banks, employing a random effect panel regression on a dataset comprising bank-level data and macroeconomic information (covering the period 2006-2013) for 9 countries of the Euro area. Our findings suggest that, after a period of "irrational exuberance" in which credit growth and high leverage were seen as proper and fast ways to boost profitability, a sound financial structure and a wiser and objective credit portfolio management have become the main drivers to ensure higher returns.

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Section: Methodsmentioning

confidence: 89%

Determinants of Bank Profitability in the Euro Area: What Has Changed During the Recent Financial Crisis?

Rossi¹,

Borroni²,

Lippi³

et al. 2018

IBR

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“…The effect of credit risk, i.e. loan losses, is clearly significant and negative (Athanasoglou et al 2008;Coffinet, Lin 2010;Sufian 2011;Kanas et al 2012). Demirguc-Kunt and Huizinga (1999) and Abreau and Mendes (2002) found that loan to total assets ratio, as a proxy of risk, is positive, meaning that higher risk is rewarded with better profitability.…”

Section: Related Literaturementioning

confidence: 99%

“…Cross-country panel data sets have been investigated by Molyneux and Thornton (1992), Demirguc-Kunt and Huizinga (1999), Abreu and Mendes (2002), Goddard et al (2004), Pasiouras and Kosmidou (2007), Albertazzi andGambacorta (2009), Goddard et al (2010), Lee and Hsieh (2013), Shehzad et al (2013), Gambacorta et al (2014), Dietrich and Wanzenried (2014). Examples of single countries' analysis are studies of Andersen et al (2008), Athanasoglou et al (2008), Apergis (2009), García-Herrero et al (2009), Coffinet and Lin (2010, Wanzenried (2011), Sufian (2011), Kanas et al (2012), Rumler and Waschiczek (2012), Trujillo-Ponce (2013), Berlemann et al (2014), Perman et al (2015), Chronopoulos et al (2015). Certainly, the empirical results of the above mentioned studies vary as time periods, data sets, examined environments and countries differ.…”

Section: Related Literaturementioning

confidence: 99%

“…Pasiouras and Kosmidou (2007), Albertazzi and Gambacorta (2009), Wanzenried (2011, 2014), Rumler and Waschiczek (2012) among others used the annual GDP growth rate to link business cycle and bank earnings. Athanasoglou et al (2008), Apergis (2009) and Kanas et al (2012) used output gat as a measure of business cycle. All authors found strong positive correlation between business cycle and bank profitability.…”

Section: Related Literaturementioning

confidence: 99%

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Bank Profitability and Macroeconomy: Evidence From Lithuania

Naruševičius

2017

Technological and Economic Development of Economy

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Abstract. The purpose of this paper is to investigate the relationship between profitability of the Lithuanian banking sector and its internal and external determinants. We use the panel error correction model to assess long-term and short-term determinants of items from bank income statements (net interest income, net fee and commission income and operating expenses). The results of the pooled mean group estimator show that bank size and real GDP are the main determinants in the long-term. Meanwhile, empirical examination suggests various variables as short-term determinants of income statement items. The pooled mean group estimation technique and the analysis of separate income statement items enable us to have a better insight into the Lithuanian banking sector and determinants of its revenue and expenses.

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“…En esta literatura el riesgo de crédito es uno de los factores que siempre se incluyen como parte de la función de rentabilidad, sin embargo, el indicador que casi siempre se usa es la razón de provisiones para riesgos crediticios respecto al total de préstamos, quizá debido a que se trata de una variable de medición muy homogénea. Ejemplos de trabajos que usan esta variable son los de Athanasoglou et al (2006), Dietrich y Wanzenried (2014), Flamini et al (2009), Kanas et al (2012), y Lee et al (2014). El signo esperado de esta variable no está claro.…”

Section: Introductionunclassified

Morosidad en el Pago de Créditos y Rentabilidad de la Banca Comercial en México

Rodríguez

2015

REMEF

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ResumenUna crítica que se formula desde hace varios años a los bancos comerciales establecidos en México es que no incrementan el volumen de crédito que otorgan a la sociedad. Esta crítica se ha vuelto más marcada a raíz del bajo crecimiento económico logrado por el país a partir de la crisis financiera internacional iniciada en 2008. Una de las posibles explicaciones para la restricción de crédito que mantiene la banca es que, dados los sistemas vigentes de identificación y calificación de las solicitudes de crédito, elíndice de morosidad de los prestatarios se vuelve una variable que impacta de manera negativa y significativa a la rentabilidad obtenida por los bancos. Esta hipótesis se analiza mediante un modelo estático con estimadores HausmanTaylor y un modelo de panel dinámico con estimadores Arellano-Bover/Blundell-Bond. Los resultados preliminares sugieren rechazar la hipótesis puesto que los factores determinantes de la rentabilidad son el nivel de capitalización, el tamaño, el nivel total de exposición al riesgo, los gastos de administración y la mezcla de actividades. AbstractOne criticism that is formulated for several years to commercial banks in Mexico is that they do not increase the volume of credit they give to society. This review has become more marked as a result of low economic growth achieved by the country from the international financial crisis that began in 2008. One of the possible explanations for the credit crisis that keeps banking is that, given the existing systems identification and assessment of credit applications, the delinquency rate of borrowers becomes a variable that impacts negatively and significantly to the profitability of banks manner. This hypothesis is analyzed by a static model estimator with Hausman -Taylor estimator and a model of dynamic panel estimators Arellano -Bover / Blundell -Bond. Preliminary results suggest reject the hypothesis since the determinants of profitability are the level of capitalization, the size, the overall level of risk exposure and the administration costs and the combination of activities.

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Revisiting bank profitability: A semi-parametric approach

Cited by 54 publications

References 57 publications

Determinants of Bank Profitability in the Euro Area: What Has Changed During the Recent Financial Crisis?

Determinants of Bank Profitability in the Euro Area: What Has Changed During the Recent Financial Crisis?

Bank Profitability and Macroeconomy: Evidence From Lithuania

Morosidad en el Pago de Créditos y Rentabilidad de la Banca Comercial en México

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