| Description |
1 online resource |
| Series |
IMF Working Paper ; WP/19/254 |
|
IMF working paper ; WP/19/254.
|
| Contents |
Cover -- Contents -- Abstract -- I.Introduction -- II. Conceptual and Empirical Framework -- A. Conceptual Framework -- B. Econometric Approach -- C. Conditional Profitability Distributions -- III. Data, Key Trends, and Stylized Facts -- A. Data -- B. Key Trends and Stylized Facts -- IV. Econometric Analysis -- A. Benchmark OLS Regression Analysis -- B. Robustness Analysis -- C. Quantile Regression Analysis -- V. Conditional Profitability Distributions -- VI. Conclusions and Policy Implications -- References -- FIGURES -- 1. Euro Area Banks (Significant Institutions): Key Trends and Stylized Facts -- 2. Illustrative Conditional Profitability (ROE) Distributions -- TABLES -- 1. Euro Area Bank Sample -- 2. Descriptive Statistics of Main Variables -- 3. Stylized Facts: Key Bank-Specific Determinants -- 4. Baseline Profitability Regressions: Return on Assets and Components -- 5. Robustness Analysis: Return on Assets -- 6. Return on Equity Regressions -- 7. Robustness Analysis: Risk-Adjusted Profitability Measures -- 8. Quantile Regressions: Return on Assets -- 9. Quantile Regressions: Return on Equity -- 11. Summary: Conditional Profitability (ROE) Distributions |
| Summary |
This paper explores the determinants of profitability across large euro area banks using a novel approach based on conditional profitability distributions. Real GDP growth and the NPL ratio are shown to be the most reliable determinants of bank profitability. However, the estimated conditional distributions reveal that, while higher growth would raise profits on average, a large swath of banks would most likely continue to struggle even amid a strong economic recovery. Therefore, for some banks, a determined reduction in NPLs combined with cost efficiency improvements and customized changes to their business models appears to be the most promising strategy for durably raising profitability |
| Notes |
Online resource; title from PDF title page (IMF, viewed Sept. 14, 2020) |
| Subject |
Bank profits -- Europe
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Banks and banking -- Europe -- Econometric models
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Eurozone.
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Bank profits
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Banks and banking -- Econometric models
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Eurozone
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Europe
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| Form |
Electronic book
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| Author |
Malik, Sheheryar, author.
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Mitra, Srobona, author.
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International Monetary Fund, issuing body.
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| ISBN |
1513522264 |
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9781513522265 |
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