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How do European banks portray the effect of policy interest rates and prudential behavior on profitability?

dc.rights.licenseopenen_US
hal.structure.identifierLaboratoire d'analyse et de recherche en économie et finance internationales [Larefi]
dc.contributor.authorCAMPMAS, Alexandra
dc.date.accessioned2022-06-24T14:36:08Z
dc.date.available2022-06-24T14:36:08Z
dc.date.issued2020-01-01
dc.identifier.issn0275-5319en_US
dc.identifier.urioai:crossref.org:10.1016/j.ribaf.2018.09.001
dc.identifier.urihttps://oskar-bordeaux.fr/handle/20.500.12278/140313
dc.descriptionarticle 100950en_US
dc.description.abstractEnEuropean policy interest rates have been low and trending downwards for almost a decade now and expectations do not seem to change. Hence, in such an environment, this paper investigates whether and how banks’ prudential behavior has influenced profitability across the European banking sector from 1999 to 2015. Using a dynamic panel model, we clearly find that banks’ financial resilience, proxied by the asymmetric Z-score and two financial ratios, affects profits: more cautious banks record higher profits. This result is confirmed by the two overall measures of profitability, namely the Return on Average Assets and Equity, but not for the Net Interest Margins. Furthermore, our analysis suggests that monetary policy's main instrument adversely affects bank income. Nevertheless, when policy interest rates are particularly low, the effect on Net Interest Margin is still positive, while the effect on the overall profitability becomes negative. These results induce that European banks succeed in increasing their profitability despite a compression of their net interest income.
dc.language.isoENen_US
dc.sourcecrossref
dc.subjectBank risk
dc.subjectPolicy interest rate
dc.subjectDynamic panel data models
dc.subjectEuropean countries
dc.subject.enProfitability
dc.title.enHow do European banks portray the effect of policy interest rates and prudential behavior on profitability?
dc.typeArticle de revueen_US
dc.identifier.doi10.1016/j.ribaf.2018.09.001en_US
dc.subject.halSciences de l'Homme et Société/Economies et financesen_US
dc.subject.jelE - Macroeconomics and Monetary Economics::E5 - Monetary Policy, Central Banking, and the Supply of Money and Crediten_US
dc.subject.jelC - Mathematical and Quantitative Methods::C2 - Single Equation Models; Single Variables::C23 - Panel Data Models; Spatio-temporal Modelsen_US
dc.subject.jelG - Financial Economics::G2 - Financial Institutions and Services::G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgagesen_US
bordeaux.journalResearch in International Business and Financeen_US
bordeaux.volume51en_US
bordeaux.hal.laboratoriesLaboratoire d'analyse et de recherche en économie et finance internationales (LAREFI) - EA2954en_US
bordeaux.institutionUniversité de Bordeauxen_US
bordeaux.institutionCNRS
bordeaux.peerReviewedouien_US
bordeaux.inpressnonen_US
bordeaux.import.sourcedissemin
hal.exportfalse
workflow.import.sourcedissemin
dc.rights.ccPas de Licence CCen_US
bordeaux.COinSctx_ver=Z39.88-2004&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.jtitle=Research%20in%20International%20Business%20and%20Finance&rft.date=2020-01-01&rft.volume=51&rft.eissn=0275-5319&rft.issn=0275-5319&rft.au=CAMPMAS,%20Alexandra&rft.genre=article


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