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Have Changes in the Financial Structure Affected Bank Profitability? Evidence for Austria

Fabio Rumler () and Walter Waschiczek ()
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Walter Waschiczek: Oesterreichische Nationalbank, Economic Analysis Division

Working Papers from Oesterreichische Nationalbank (Austrian Central Bank)

Abstract: We examine the impact of changes in the financial structure of the Austrian banking sector over the past 15 years, such as disintermediation, internationalization and privatization, on the profitability of banks. Several proxies based on bank balance sheet data at the micro level as well as macroeconomic variables are used to capture these changes. The case of Austria is particularly interesting because country-specific developments, such as the opening-up of the banking sector due to EU accession, coincided with the global deregulation of banking activities. Our estimation results, which are based on dynamic panel regression methods, indicate that disintermediation (a lower percentage of loans over total assets) and higher market concentration in the banking sector had a positive effect on bank profitability, while, surprisingly, changes in the ownership structure (privatization and increased foreign ownership) as well as more foreign lending by Austrian banks did not have a clear-cut or significant impact on bank profits.

Keywords: Bank Profitability; Banking Market Structure; Dynamic Panel Estimation (search for similar items in EconPapers)
JEL-codes: C33 D40 E44 G21 G32 (search for similar items in EconPapers)
Pages: 41
Date: 2012-09-26
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eff and nep-ore
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Journal Article: Have changes in the financial structure affected bank profitability? Evidence for Austria (2016) Downloads
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