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European bank profitability: the Great Convergence?

Martien Lamers (), Thomas Present and Rudi Vander Vennet ()

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: Have Euro Area banks restored viability in the post-crisis era? We investigate profitability convergence for Euro Area banks over the period 2009-2020 using the concepts of ß and s convergence and a club clustering algorithm. Our evidence is consistent with a slow catch up of the weaker banks, but we also document that better performing banks converge towards a lower profit level, suggesting a ‘great convergence’ towards the middle. Moreover, we identify a cluster of banks exhibiting dismal profit dynamics, indicating the need for a restructuring of part of the Euro Area banking sector.

Keywords: Euro Area banks; bank profitability; ß convergence; s convergence; club clustering analysis (search for similar items in EconPapers)
JEL-codes: C38 G20 G21 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2022-02
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-eec, nep-eff, nep-fdg, nep-his and nep-isf
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:22/1039

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