Understanding the profitability gap between euro area and US global systemically important banks

Natalia Martín Fuentes, Luca Di Vito and João Matos Leite

No 327, Occasional Paper Series from European Central Bank

Abstract: This investigation starts with the observation that, over the last decade, profitability rates reported by euro area (EA) banks have remained, on average, persistently below those reported by peer banks in the United States (US). In particular, banks’ return on equity (ROE) has fluctuated around 5% in the EA, but around 10% in the US, indicating a profitability gap of around 5 percentage points. However, while comparisons are frequently made between EA and US banks in academic and political debate, they are not perfect benchmarks, nor should this paper be regarded as aiming for a like-for-like comparison. JEL Classification: G15, G21

Keywords: Bank profitability; global systemically important (G-SIB) banks; return on equity (search for similar items in EconPapers)
Date: 2023-08
New Economics Papers: this item is included in nep-ban, nep-eec and nep-fdg
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbops:2023327

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