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The profitability of the consumer credit industry: evidence from Europe

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  • Luisa ANDERLONI
  • Daniela VANDONE

Abstract

The paper focuses on the profitability of the consumer credit industry in Europe. Using consumer credit companies’ financial statement data, we investigate the effect of firm-specific and market-specific factors on the profitability of a sample of French, German, Italian and Spanish consumer credit companies over the period 2005-07. Results highlight that, among firm-level determinants, diversification of products and services within lending to households is the most influential driver of profit. With regards to market-specific factors, the profitability of consumer credit companies is positively affected by the size of the market, and negatively determined by the level of household debt burden.

Suggested Citation

  • Luisa ANDERLONI & Daniela VANDONE, 2010. "The profitability of the consumer credit industry: evidence from Europe," Departmental Working Papers 2010-24, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2010-24
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    More about this item

    Keywords

    Financial companies; consumer credit; profitability; cross-country analysis;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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