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The performance of the euro area banking system: the pandemic in perspective

Author

Listed:
  • Maria-Eleni K. Agoraki

    (University of the Peloponnese)

  • Georgios P. Kouretas

    (IPAG Business School
    Athens University of Economics and Business)

  • Francisco Nadal Simone

    (University of Luxembourg-UBI)

Abstract

This research explores the performance of the euro area banking system between 2002:Q3 and 2021:Q1 using banks’ return on assets as a gauge. It finds that despite the Covid-19 pandemic, the banking sector’s performance has not been negatively affected in a statistically significant way. In addition, it shows that while the global financial crisis and the sovereign crisis both introduced significant uncertainty in the performance of the banking system in the euro area, such uncertainty has not been replicated during the worst part of the Covid-19 pandemic. From a purely technical viewpoint, uncertainty in the banking system’s performance in the euro area highlights the relevance of using methodological approaches that control for the endogeneity of most bank-specific determinants of return on assets and that are robust to changes in unconditional variance due to regime changes, to future random shocks or both.

Suggested Citation

  • Maria-Eleni K. Agoraki & Georgios P. Kouretas & Francisco Nadal Simone, 2025. "The performance of the euro area banking system: the pandemic in perspective," Review of Quantitative Finance and Accounting, Springer, vol. 65(1), pages 39-69, July.
    • Handle: RePEc:kap:rqfnac:v:65:y:2025:i:1:d:10.1007_s11156-023-01180-1
    DOI: 10.1007/s11156-023-01180-1
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    Keywords

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    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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