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Determinants of the Profitability in the Czech Banking Industry

Iveta Paleckova ()
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Iveta Paleckova: Silesian University in Opava

ACTA VSFS, 2016, vol. 10, issue 2, 142-158

Abstract: The aim of this paper is to estimate the banking profitability determinants of the Czech commercial banks during the period 2004-2014. For estimation of banking profitability we used three common measures, namely the Return on Assets, Return on Equity and Net Interest Margin. We estimated twelve determinants of banking performance. The effect of the determinants of banking profitability is estimated using panel data analysis. The data set is consists of seventeen commercial banks in the Czech Republic. The results show that the profitability was positively influenced by the bank’s size, capitalization, credit risk, level of concentration, ownership structure and bank’s market share. Number of branches of the bank had the negative impact on ROA and ROE. on the other hand, the variables Gross Domestic Product, interest rate, liquidity risk, riskiness of bank’s portfolio and affiliation with financial conglomerate have not got the significant influence on profitability of the Czech commercial banks.

Keywords: performance; return on assets; return on equity; panel data analysis; bank-specific factors; market-specific factors; banking sector; Czech Republic (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:prf:journl:v:10:y:2016:i:2:p:142-158