The European Banking Industry Profitability—A Driver for Populism

Florin Dãnescu ()
Additional contact information
Florin Dãnescu: The Bucharest University of Economic Studies

A chapter in Smart Solutions for a Sustainable Future, 2025, pp 87-101 from Springer

Abstract: Abstract This study assesses the profitability of EU banks during 2010–2021 on three levels: 1. determining factors, 2. differences between the former communist countries and the core-capitalist countries, and 3. the myth of banking profitability and its relationship with populism. Profitability is examined from the perspectives of return on assets and return on equity. As determinant factors of profitability, we consider endogenous and exogenous indicators reflecting credit risk, operational efficiency, market size, market concentration and competition, demand evolution, capital adequacy, and inflation. Populism is considered relevant as a proxy for legislative risk and perceptions about the banking industry. The overall negative perception of the industry is attributed to the belief in the so-called exaggerated profitability, leading to consistent and significant legislative initiatives that generally restrict the development of banking finance. The analysis is structured around the banking industries of EU countries and then the two major groups within the EU: former communist countries and Western countries. The significance level of profitability determinants supports the existence of significant gaps between the banking systems of the former communist bloc and Western countries. Populism disproportionately impacts profitability in Eastern economies compared to their Western counterparts. The study additionally engages in per-industry comparative analysis of profitability measures.

Keywords: Banking industry; European Union; Return on equity (ROE); Return on assets (ROA); Financial intermediation; Populism (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-78179-7_8

Ordering information: This item can be ordered from
http://www.springer.com/9783031781797

DOI: 10.1007/978-3-031-78179-7_8

Access Statistics for this chapter

More chapters in Springer Proceedings in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().