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Internal factors of bank profitability in the Republic of Serbia

Author

Listed:
  • Violeta Domanovic
  • Violeta Todorovic
  • Sladjana Savovic

Abstract

For adequate profitability management, it is important to identify all the factors that lead to its rise or fall, as well as to determine the intensity of correlation between relevant factors and profitability. This is to take timely and adequate measures to eliminate deviations arising from the expected profitability and improve it in the future period. The research subject is bank profitability in the Republic of Serbia in the period 2012-2015. The research objective is to outline the possible factors of bank profitability, with particular reference to internal factors of banking sector profitability in the Republic of Serbia. Research results show a high degree of correlation between the ROA and ROE profitability ratios, both statically and dynamically; dynamics of profitability ratios is in inverse correlation with capital adequacy ratio; there is a link between bank size and profitability and a link between the change of bank ownership and profitability, but it does not necessarily mean that foreign banks are more profitable than domestic banks.

Suggested Citation

  • Violeta Domanovic & Violeta Todorovic & Sladjana Savovic, 2018. "Internal factors of bank profitability in the Republic of Serbia," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(3), pages 659-673, June.
    • Handle: RePEc:pdc:jrnbeh:v:14:y:2018:i:3:p:659-673
    DOI: 10.15208/beh.2018.46
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    References listed on IDEAS

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    Cited by:

    1. Krumina Dace & Lejniece Ilona & Skvarciany Viktorija, 2020. "Determinants of Bank Profitability: Case of Latvia," Economics and Culture, Sciendo, vol. 17(2), pages 30-37, December.

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    More about this item

    Keywords

    Internal factors of profitability; external factors of profitability; banks; transition economies;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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