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Euro Adoption and Bank Profitability in Central and Eastern Europe

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  • Jan Zając
  • Wojciech Paczos

Abstract

We provide new evidence on the effects of adopting a common European currency on bank profitability in Central and Eastern Europe (CEE). We construct a panel of 1033 bank-year observations across 11 countries between 2006 and 2020. Our results suggest that the effect of joining the euro area on bank profitability is not statistically significant over a longer period, but that the euro exerts downward pressure on banks’ profits in a stable economic climate. Additionally, we contribute to the existing literature on determinants of bank profitability in the CEE region and confirm that capitalisation and bank size have a positive influence, while liquidity and the loans-to-assets ratio have a negative influence on profitability.

Suggested Citation

  • Jan Zając & Wojciech Paczos, 2026. "Euro Adoption and Bank Profitability in Central and Eastern Europe," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 1, pages 7-27.
    • Handle: RePEc:aoq:ekonom:y:2026:i:1:p:7-27
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    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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