The Impact of Changes in Financial Supervision on the Profitability of the Hungarian Banking Sector

Tibor Bareith, Tibor Tatay and József Varga
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Tibor Bareith: Department of Investment, Finance and Accounting, Hungarian University of Agriculture and Life Sciences, Kaposvár Campus, HU7400 Kaposvár, Hungary
Tibor Tatay: Department of Economic Analyses, Széchenyi István University, HU9026 Győr, Hungary
József Varga: Department of Investment, Finance and Accounting, Hungarian University of Agriculture and Life Sciences, Kaposvár Campus, HU7400 Kaposvár, Hungary

Economies, 2022, vol. 10, issue 7, 1-19

Abstract: Since 2013, the central bank has been responsible for supervision in Hungary. In addition to the regulatory change, a law was published in the same year that started the process of abolishing the savings co-operative system. This paper investigates the impact of these two significant changes on the profitability of the Hungarian banking sector between 2003 and 2019 using dynamic panel model estimates. The supervisory change has reduced the profitability of credit institutions and tighter supervision has been implemented. The transformation of the savings co-operative system was in fact an integration that led to the disappearance of savings co-operatives by 2019. Competition in the market has been weakened, which has increased the profitability of the remaining financial institutions. The results were robust in terms of the multiple specifications and profitability ratio.

Keywords: supervision change; profitability; structural change; profit persistence (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:10:y:2022:i:7:p:176-:d:868232

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