The Determinants of Bank Profitability: A Case of Central European Countries

Sultonbek Uralov¹

Section:Research Paper, Product Type: Journal-Paper
Vol.8 , Issue.3 , pp.8-16, Sep-2020

Online published on Sep 30, 2020

Copyright © Sultonbek Uralov . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
This paper examines the determinants of the profitability of banking systems in the Central European countries group during 1996-2017. The study uses three various indicators of bank performance, such as return on investment, return on equity and net interest margin. The regression models also provide a vast array of both internal and external factors which impact on bank profitability. The empirical findings indicate that the effects of the variables to profitability vary based on the measure of profitability. Economic growth has been shown to substantially and positively affect only return on bank assets. However, it should be stressed that inflation rate impacts strongly and favorably on all three indices of profitability. These outcomes provide new insights into what factors dictate banking system profitability.

Key-Words / Index Term :
Determinants, Profitability, Internal, External, Banking system, Generalized Method of Moment

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