Determinants of Commercial Bank Profitability in Mexico

Ruben Chavarin Rodriguez ()
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Ruben Chavarin Rodriguez: Universidad de Guadalajara

EconoQuantum, Revista de Economia y Finanzas, 2015, vol. 12, issue 1, 97-123

Abstract: The aim of the present work is to identify the main determinants of profitability for commercial banks established in Mexico. A database of 45 banks representing virtually the whole world of commercial banking in the period 2007-2013 was used. Dynamic models using Arellano-Bover/BlundellBond estimators with an error that follows an MA(1) process were employed along with static models having random effects and Hausman-Taylor estimator. Findings suggest that the profitability of commercial banking is sustained by the level of capital, the charging of commissions and fees, and control of operating expenses, as well as certain market entry barriers and obstacles to competition that provoke a relatively high persistence of profitability.

Keywords: Bank profitability; Dynamic panel-data; Latin America. (search for similar items in EconPapers)
JEL-codes: C23 G21 L13 O54 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:qua:journl:v:12:y:2015:i:1:p:97-123

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