IDEAS home Printed from https://ideas.repec.org/a/now/jnlrbe/105.00000157.html
   My bibliography  Save this article

European Banks’ Profitability and Sentimental Cycle

Author

Listed:
  • Dimitris Anastasiou
  • Stelios Giannoulakis
  • Andreas Koutoupis
  • Christos Tzomakas
  • Leonidas G. Davidopoulos

Abstract

Utilizing bank-level data and a Mixed Frequency VAR approach, this study examines the effects of a shock at the economic sentiment on European banks’ profitability during the 1995–2019 period. We find that a greater shock in economic sentiment leads to a persistent and gradually amplified stimulation of banks’ profitability. Our findings extend previous evidence on the determinants of bank profitability and have important policy implications. First, macroprudential policymakers and regulators should design and implement a regulatory framework that has an especial focus on economic sentiment accompanied by the usual bank-specific or macroeconomic-specific fundamentals to facilitate the existence of higher profitability in the banking industry. Second, banks' management (Boards, Risk Committees, and executive management) should embrace a more forward-looking philosophy and implement sentiment indicators to their strategy to achieve sustainability.

Suggested Citation

  • Dimitris Anastasiou & Stelios Giannoulakis & Andreas Koutoupis & Christos Tzomakas & Leonidas G. Davidopoulos, 2022. "European Banks’ Profitability and Sentimental Cycle," Review of Behavioral Economics, now publishers, vol. 9(3), pages 223-250, September.
    • Handle: RePEc:now:jnlrbe:105.00000157
    DOI: 10.1561/105.00000157
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1561/105.00000157
    Download Restriction: no
    File URL: https://libkey.io/10.1561/105.00000157?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:now:jnlrbe:105.00000157. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lucy Wiseman (email available below). General contact details of provider: http://www.nowpublishers.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.