Profitability of Foreign Owned Banks in Central and Eastern European Countries
| Author: | Bc. Andrea Kufnerová |
|---|---|
| Year: | 2013 - summer |
| Leaders: | PhDr. Jitka Lešanovská |
| Consultants: | |
| Work type: | Bachelors |
| Language: | English |
| Pages: | 55 |
| Awards and prizes: | |
| Link: | |
| Abstract: | Since foreign owned banks create important market shares in the banking sectors in the Central and Eastern European (CEE) countries, the aim of this study is to detect the determinants of the profitability of foreign banks operating in this region. In our study, we focus on the sample of foreign owned banks in 10 CEE countries during the period 2003–2011. We investigate, using the econometric analysis, the impact of bank-specific, macroeconomic and market structure characteristics as well as the euro area development on the profitability of foreign owned banks. We also examine whether the impact of these determinants differs in the period before the global financial crisis and during the crisis. Our results suggest significant influence of the bank-specific factors on the profitability of foreign owned banks and that the sensitivity of profitability to bank-specific characteristics has even risen during the crisis period. Surprisingly, we do not find the relation between the market structure in the host country, where the banks operate, and the profitability similarly to the participation of the host country in the European Union and the euro area. However, some of the macroeconomic variables capturing both the host country and the euro area developments affect bank profitability but in some cases differently in the precrisis and the crisis period. |
