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Do equity investments affect banks' profitability? Evidence from OECD countries

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  • Francisco Gonzalez
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    Abstract

    This paper analyses the influence of equity investments on banks' profitability in a panel data of 24 OECD countries. The results suggest a positive influence of banks' equity investments on banks' interest rate margin and banks' net income that is not outweighed by additional requirements of provisions and capital that supervisory authorities establish to control bank risk. The positive effect equity investments have on banks' interest margin is consistent with the banks' ability as shareholders to obtain benefits in the lending relationship they also keep with firms.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/09603100412331297669
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    Bibliographic Info

    Article provided by Taylor and Francis Journals in its journal Applied Financial Economics.

    Volume (Year): 14 (2004)
    Issue (Month): 15 ()
    Pages: 1111-1124

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    Handle: RePEc:taf:apfiec:v:14:y:2004:i:15:p:1111-1124

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    Cited by:
    1. Olena Havrylchyk & Emilia Jurzyk, 2005. "Profitability of Foreign and Domestic Banks in Central and Eastern Europe : Does the Mode of Entry Matter?," Working Papers 2005-21, CEPII research center.

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