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The determinants of commercial banks’ profitability in the South-Eastern Europe region: a system GMM approach

The determinants of commercial banks’ profitability in the South-Eastern Europe region: a system GMM approach

Guidi, Francesco ORCID: 0000-0002-2682-189X and Enowbi Batwo, Michael (2020) The determinants of commercial banks’ profitability in the South-Eastern Europe region: a system GMM approach. [Working Paper] (Unpublished)

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Abstract

This study investigates the determinants of banks’ profitability on a sample of 169 commercial banks located in 7 countries of South-Eastern Europe. Specifically, the study employs dynamic panel data analysis based on the generalized method of moments over a period spanning from 2003–2012. By using alternative measures of profitability, such as ROA and ROE, the results suggest that total assets and loan loss provision usually have more pronounced effects on Banks’s profitability than other variables, and that macroeconomic variables are also usually statistically significant therefore highlighting their importance. Splitting the sample into small and large banks, we found that the determinants of profitability on small banks have a larger effect in comparison to large banks irrespective of the profitability measures used in the analysis; the opposite is the case on macroeconomic variables.

Item Type: Working Paper
Uncontrolled Keywords: profitability, banking, dynamic panel, South-Eastern Europe
Subjects: H Social Sciences > HB Economic Theory
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Last Modified: 19 Feb 2021 10:46
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
Selected for REF2021: None
URI: http://gala.gre.ac.uk/id/eprint/30231

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