The Short-Term Effects of the Pandemic (COVID-19) on Banks With Activity in Portugal

Abstract

In this chapter, the authors assess the short-term effects of the pandemic (COVID-19) on banks with activity in Portugal. Namely, with regard capital buffer, it is intended to describe, in a succinct way, the measures taken by Portugal government to minimize the crisis effects. On the other hand, researchers divided the factors that can influence bank capital buffer in several groups, namely management efficiency, credit quality, and profitability. The panel dataset is composed of report annual data of 18 banks operating in Portugal, representing about 98% of the Portuguese banking product. The dependent variable is the capital buffer (BUF). The results show that credit quality (ICV), management efficiency (CTIN), and profitability (ROA and ROE) have a significant impact on bank capital buffer. Banks that have good credit quality indicators (ICV), management efficiency (CTIN), capital adequacy, and capital buffer (BUFF) will be better prepared to face the pandemic that is just taking its first steps.