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Determinants of Bank Profitability in the South Eastern European Region

  • Panayiotis P. Athanasoglou

    ()

    (Bank of Greece)

  • Matthaios D. Delis

    (Athens University of Economics and Business)

  • Christos K. Staikouras

    (Athens University of Economics and Business)

The aim of this study is to examine the profitability behaviour of bank-specific, industryrelated and macroeconomic determinants, using an unbalanced panel dataset of South Eastern European (SEE) credit institutions over the period 1998-2002. The estimation results indicate that, with the exception of liquidity, all bank-specific determinants significantly affect bank profitability in the anticipated way. A key result is that the effect of concentration is positive, which provides evidence in support of the structure-conduct-performance hypothesis, while at the same time some relevance of the efficient-structure hypothesis cannot be rejected. In contrast, a positive relationship between banking reform and profitability was not identified, whilst the picture regarding the macroeconomic determinants is mixed. The paper concludes with some remarks on the practicality and implementability of the findings.

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Paper provided by Bank of Greece in its series Working Papers with number 47.

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Length: 35 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:bog:wpaper:47
Contact details of provider: Web page: http://www.bankofgreece.gr

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