THE IMPACT OF THE COVID-19 PANDEMIC ON THE BANKS’ PROFITABILITY IN THE ROMANIAN BANKING SECTOR

Ioana Georgiana Fä‚rcaè˜ () and CODRUÈšA-MARIA Fä‚t ()
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Ioana Georgiana Fä‚rcaè˜: BabeÈ™-Bolyai University, Cluj-Napoca, Romania
CODRUÈšA-MARIA Fä‚t: BabeÈ™-Bolyai University, Cluj-Napoca, Romania

Review of Economic and Business Studies, 2023, issue 31, 127-140

Abstract: Covid-19 pandemic has a huge impact on all of the sectors, especially on the banking activity due to reduced demand for different types of loans. Therefore, we aim to investigate whether COVID-19 pandemic influences the banks’ performance measured though two indicators, Return on Assets (ROA) and Return on Equity (ROE). We analyse Romanian banking sector, spanning from 2007-2022. The main findings show that the pandemic influences negatively the banks’ profitability, but the economic environment plays also an important role in determining ROA and ROE. We bring new insights regarding the effects of macroeconomic indicators such as GDP Growth, Unemployment, Inflation and Volatility of RON/EUR on banks’ performance. Further, we analyse the determinants of ROA’s and ROE’s volatility. Our results bring evidence that main driver of standard deviation of ROA and standard deviation of ROE are External Debt Growth and Domestic Liabilities Growth.

Keywords: banks’ profitability; banking market; emerging markets; covid (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:aic:revebs:y:2023:j:31:farcasi

DOI: 10.47743/rebs-2023-1-0007

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