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Bank-specific, industry-specific and macroeconomic determinants of bank profitability

  • Athanasoglou, Panayiotis P.
  • Brissimis, Sophocles N.
  • Delis, Matthaios D.

The aim of this study is to examine the effect of bank-specific, industry-specific and macroeconomic determinants of bank profitability, using an empirical framework that incorporates the traditional structure-conduct-performance (SCP) hypothesis. To account for profit persistence, we apply a GMM technique to a panel of Greek banks that covers the period 1985-2001. The estimation results show that profitability persists to a moderate extent, indicating that departures from perfectly competitive market structures may not be that large. All bank-specific determinants, with the exception of size, affect bank profitability significantly in the anticipated way. However, no evidence is found in support of the SCP hypothesis. Finally, the business cycle has a positive, albeit asymmetric effect on bank profitability, being significant only in the upper phase of the cycle.

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Article provided by Elsevier in its journal Journal of International Financial Markets, Institutions and Money.

Volume (Year): 18 (2008)
Issue (Month): 2 (April)
Pages: 121-136

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Handle: RePEc:eee:intfin:v:18:y:2008:i:2:p:121-136
Contact details of provider: Web page: http://www.elsevier.com/locate/intfin

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