What Are the Drivers of Bank Profitability in the World? A Critical Review of the Empirical Literature with the Layout of a Blueprint Model

Despite the existence of an extensive literature on determinants of bank profitability, there exists no paper which comprehensively weaves through this literature. We humbly undertake such a review by painstakingly discussing all the potential proxies to end up with a holistic model. We keep abreast of the evolving dynamics by proposing two new metrics, namely aging population and digitization to cope with the detrimental sequels of COVID-19. Our full-fledged model consists of bank-specific, macroeconomic-specific, crisis dummies and interacting variables. Operational risk is found to be an area that will need to be further developed in the literature. Our proposed model can be applied to a specific country or a group of countries with researchers being able to flexibly tweak our blueprint model to suit their own specific applications.