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Euro adoption and banks profitability in Central and Eastern Europe

Author

Listed:
  • Zájac, Jan

    (University of Bristol)

  • Paczos, Wojtek

    (Cardiff Business School, Cardiff University; Institute of Economics, Polish Academy of Sciences)

Abstract

Using panel data for 92 banks in 11 CEE countries over 2006–2020, we investigate how joining the euro affects bank profitability. Overall the effect is statistically indistinguishable from zero, but in tranquil periods euro membership lowers returns. Higher capital ratios and larger size raise profitability, whereas greater liquidity and loan intensity reduce it.

Suggested Citation

  • Zájac, Jan & Paczos, Wojtek, 2025. "Euro adoption and banks profitability in Central and Eastern Europe," Cardiff Economics Working Papers E2025/17, Cardiff University, Cardiff Business School, Economics Section.
    • Handle: RePEc:cdf:wpaper:2025/17
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    References listed on IDEAS

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    1. Fiordelisi, Franco & Ricci, Ornella & Stentella Lopes, Francesco Saverio, 2017. "The Unintended Consequences of the Launch of the Single Supervisory Mechanism in Europe," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 52(6), pages 2809-2836, December.
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    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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