Demographic Change and Bank Profitability. Empirical Evidence from German Savings Banks

Michael Berlemann (), Marco Oestmann and Marcel Thum

No 2911, CESifo Working Paper Series from CESifo

Abstract: Most European economies will experience significant demographic changes in the decades ahead. Due to low birth rates, populations are shrinking and ageing at the same time. This paper explores the impact of demographic change on the banking industry. A unique data set, which contains detailed information on almost 2.5 million accounts in 11 German savings banks, allows us estimating the socio-demographic determinants of retail profitability. Using a simulation model, we are able to predict the development of bank profitability due to demographic shifts up to 2025. One of the main findings is that the effects of population ageing will partially offset the impact of shrinking customer bases. While the decline in the size of the population reduces the customer base, ageing per se increases profitability as older customers typically generate higher profits for their banks.

Keywords: demography; banking; savings banks; profitability (search for similar items in EconPapers)
JEL-codes: G21 J10 L10 O16 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Demographic change and bank profitability: empirical evidence from German savings banks (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2911

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