EconPapers    
Economics at your fingertips  
 

Investigating the Causality between Bank Profitability and Economic Growth: Evidence from Central and Eastern Europe

Mihail Petkovski, Jordan Kjosevski, Aleksandar Stojkov () and Katerina Bartasek Petkovska
Additional contact information
Mihail Petkovski: Faculty of Economics, University Ss. Cyril and Methodius in Skopje, Republic of Macedonia
Jordan Kjosevski: S/N Broker, Republic of Macedonia
Katerina Bartasek Petkovska: Cleo Finance

Czech Journal of Economics and Finance (Finance a uver), 2023, vol. 73, issue 3, 303-327

Abstract: This article investigates the impact of bank profitability on economic growth for a sample of 16 countries from Central and Eastern Europe during the period from 2000-2021. While low bank profitability is considered a risk for economic growth, the extent to which higher levels of profitability are conducive to growth remains an open question. The remarkably consistent empirical results obtained using multiple econometric techniques uncover a statistically and economically significant positive relationship. A one percent increase in banks’ return on assets is associated with higher economic growth in the range of 0.625 and 0.635 percentage points. When richer dynamics of bank profitability are explored, the impact of past realisations of bank profitability on growth does not endure in the long run. We also performed a battery of country-specific tests to examine the bidirectional causality between bank profitability and economic growth in the selected countries.

Keywords: bank profitability; economic growth; Central and Eastern Europe; panel analysis (search for similar items in EconPapers)
JEL-codes: G21 O16 O40 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journal.fsv.cuni.cz/mag/article/show/id/1522 (application/pdf)

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:fau:fauart:v:73:y:2023:i:3:p:303-327

Access Statistics for this article

More articles in Czech Journal of Economics and Finance (Finance a uver) from Charles University Prague, Faculty of Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Natalie Svarcova ().

 
Page updated 2025-01-08
Handle: RePEc:fau:fauart:v:73:y:2023:i:3:p:303-327