Bank-Specific, Industry-Specific and Macroeconomic Determinants of Bank Profitability

By P. P. Athanasoglou, Sophocles N. Brissimis, Matthaios D. Delis. Social Science Research Network, 2008

2,802 citations recorded by the source corpus.

The aim of this study is to examine the effect of bank-specific, industry-specific and macroeconomic determinants of bank profitability, using an empirical framework that incorporates the traditional Structure-Conduct-Performance (SCP) hypothesis. To account for profit persistence, we apply a GMM technique to a panel of Greek banks that covers the period 1985-2001. The estimation results show that profitability persists to a moderate extent, indicating that departures from perfectly competitive market structures may not be that large. All bank-specific determinants, with the exception of size, affect bank profitability significantly in the anticipated way. However, no evidence is found in support of the SCP hypothesis. Finally, the business cycle has a positive, albeit asymmetric effect on bank profitability, being significant only in the upper phase of the cycle.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/c60a6eb41ade413f82dfae6f45b47042f072966f

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Citations in the corpus

ESG and financial performance of banks in the MENAT region: concavity–convexity patterns (2021, background): “A low CI ratio implies a higher efficiency (Athanasoglou, Brissimis, and Delis 2008; Mirzaei, Moore, and Liu 2013).”
Monetary Policy and Bank Profitability in a Low Interest Rate Environment (2018, neutral): “In line with previous studies (e.g. Athanasoglou et al., 2008; García-Herrero et al., 2009), we find that cost efficiency has a positive and highly significant impact on profitability: a one standard deviation (i.e. 25 percentage point) increase in the cost-to-income ratio reduces ROA by 6 basis…”
The profitability of banks in Japan (2010, neutral): “( 2008 ), in adverse macroeconomic conditions, banks may suffer from increasing shares of nonperforming loans.”
Comparative study of the performance of Islamic and conventional banks: The case of Malaysia (2013, background): “However, Athanasoglou et al. (2005), Pratomo and Ismail (2006) and Wasiuzzaman and Tarmizi (2010) found a significantly negative relationship using the same ratio.”
Determinants of Bank Profitability in Ukraine (2011, result): “Such treatment of these variables is consistent with the literature, i.e. Athanasoglou et al. (2006).”
Bank profitability and risk-taking under low interest rates (2017, background): “Although this effect is not fully supported by the related literature, e.g. Athanasoglou et al. (2008) and Trujillo-Ponce (2013), it is similar to Dietrich & Wanzenried (2011).”
Determinants of Net Interest Margins of Commercial Banks in Kenya: A Panel Study (2012, methodology): “To proxy credit risk, we use loan loss provision to total loans (this measurement is consistent with previous studies such as, Athanasoglou et al., 2005).”
Determinants of financial performance in Chinese banking (2010, methodology): “The greater demand for bank services coupled with a lower risk of 25 The independent variables are selected based on findings from previous studies (e.g. Goddard et al., 2004; Kosmidou et al., 2004; Valverde and Fernández, 2007; Athanasoglou et al., 2008 and etc.).”