Macroeconomic, industry-specific and bank-specific determinants of the profitability of Brazilian banks: dynamic panel evidence

Leandro Coghi Bernardelli () and Carlos Enrique Carrasco-Gutierrez ()
Additional contact information
Leandro Coghi Bernardelli: Catholic University of Brasília (PPGE/UCB)
Carlos Enrique Carrasco-Gutierrez: Catholic University of Brasília (PPGE/UCB) and Graduate Program in Public Policy, Catholic University of Brasília (MPPP/UCB)

Empirical Economics, 2024, vol. 67, issue 2, No 10, 693-726

Abstract: Abstract This paper seeks to identify the effect of macroeconomic, industry-specific and bank-specific determinants on the profitability of the Brazilian banking sector. Profitability is measured by return on assets (ROA), return on equity (ROE) and economic value added (EVA). We incorporate in the analysis-independent variables of this sector that have not been considered in previous studies. To address profit persistence, we apply a dynamic panel data model and the GMM technique described by Arellano and Bover (1995) over the quarterly period from 2009Q1 to 2019Q4. The main results show that the macroeconomic variables of credit, activity and interest rate contribute to understanding the determining factors of bank profitability in Brazil. Regarding industry-specific and bank-specific determinants, the total operating expenses to total assets ratio and net interest margin are important determinants of the bank profitability, respectively. Thus, these new macroeconomic variables and industry-specific and bank-specific variables are important drivers to understand banking profitability in Brazil, as well as indicators to be monitored by the monetary authority to ensure the financial health of the banking system.

Keywords: Banks; Bank profitability; Macroeconomic variables; GMM estimator (search for similar items in EconPapers)
JEL-codes: G2 G20 G21 G3 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00181-024-02568-1 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:empeco:v:67:y:2024:i:2:d:10.1007_s00181-024-02568-1

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-024-02568-1

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().