The Profitability of the Central and Eastern European Banking Systems in Correlation with the Macroeconomic Environment

Radulescu Magdalena (), Belascu Lucian () and Dita Sandra Maria ()
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Radulescu Magdalena: University of Pitesti
Belascu Lucian: Lucian Blaga University of Sibiu
Dita Sandra Maria: Lucian Blaga University of Sibiu

A chapter in The Changing Financial Landscape, 2021, pp 237-253 from Springer

Abstract: Abstract The macroeconomic situation is correlated with the performance of the banking sector, and the last financial and economic crisis clearly demonstrated that. That is why we have considered the external factors of the banking sectors in this research. Our analysis covers the post-crisis period when the macroeconomic environment became more stable to stress how it impacted on the banking profitability in the CEE area. By analyzing the trends of the banking profitability ratios and the developments of some important macroeconomic factors, we can see if they can be correlated or not for 11 CEE countries. We have found that a low unemployment rate and low interest rate bonds yields are associated with the increase of the banking profitability ratios in the CEE region. A low taxation level supports net interest margin (NIM). An increase of the GDP per capita and high concentration level of the banking systems are associated with a decrease of NIM, but are associated with the increase of ROE. The high inflation rates and large public deficits in some CEE countries significantly supported the increase of the banking profitability ratios in this region, but that cannot represent a solution in the long-run for the banking managers in the CEE countries.

Keywords: Banking profitability ratios; Macroeconomic environment; CEE countries; E44; G21 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-030-82778-6_14

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DOI: 10.1007/978-3-030-82778-6_14

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