Determinants of Bank Profitability in CEE Countries: Evidence from GMM Panel Data Estimates

Alexandra Horobet, Magdalena Radulescu, Lucian Belascu and Sandra Maria Dita
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Alexandra Horobet: Department of International Business and Economics, Faculty of International Business and Economics, Bucharest University of Economic Studies, 6 Piata Romana, 010374 Bucharest, Romania
Magdalena Radulescu: Department of Finance, Accounting and Economics, University of Pitesti, Str. Targu din Vale, No. 1, Pitesti, 110094 Arges, Romania
Lucian Belascu: Department of Business Administration, Faculty of Economic Studies, University “Lucian Blaga” of Sibiu, Calea Dumbravii, No. 17, 550324 Sibiu, Romania
Sandra Maria Dita: Doctoral School, “Lucian Blaga” University of Sibiu, Bd. Victoriei, No. 10, 550024 Sibiu, Romania

JRFM, 2021, vol. 14, issue 7, 1-23

Abstract: Given the high resilience of the Central and Eastern Europe (CEE) banking sectors during the last financial crisis and their major role in the CEE region in financing the economy and supporting the high growth rates achieved there, our paper investigates the determinants of banking profitability in the CEE banking sectors based on a Generalized Method of Methods (GMM) approach using data between 2009 and 2018. We have selected determinants from the macroeconomic factors and from the financial-banking specific factors using a two-step GMM method. Our findings demonstrate that unemployment rate, inflation, budget balance, non-governmental credit, non-performing loan rates, concentration rate and capitalization rate negatively impact on the banking profitability in the CEE banking sectors. According to these findings, some policy recommendations were elaborated.

Keywords: bank profitability; Central and Eastern Europe; financial markets; macroeconomic conditions; dynamic panel; GMM estimation (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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