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Study regarding the influence of the endogenous and exogenous factors on credit institution’s return on assets

Author

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  • Maria-Daciana RODEAN (COZMA)

    (“Lucian Blaga” University, Sibiu, Romania)

  • Nicolae BALTEŞ

    (“Lucian Blaga” University, Sibiu, Romania)

Abstract

The goal of each credit institution is represented by profitability, an objective hardly to be achieved, taking into account that banks are practicing their usual activities within a banking system that hardly tries to recover. The main purpose of this research is to identify the existence of a dependency relationship between return on assets and endogenous factors (growth rate of the loan portfolios; the rate of growth of the provisions and solvency ratio) and the exogenous ones (GDP and inflation rate). The analysis done over the horizon of the last 10 years, a period that includes both economic boom, recession and recovery, illustrated the vulnerability of the credit institution in front of the business environment. The study demonstrated a significant dependence relationship, between return on assets recorded by Carpatica Commercial Bank and the intern determinants, while the variation of the exogenous factors does not explain the variation of ROA recorded by the bank.

Suggested Citation

  • Maria-Daciana RODEAN (COZMA) & Nicolae BALTEŞ, 2016. "Study regarding the influence of the endogenous and exogenous factors on credit institution’s return on assets," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(606), S), pages 247-254, Spring.
    • Handle: RePEc:agr:journl:v:xxiii:y:2016:i:1(606):p:247-254
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    References listed on IDEAS

    as
    1. Athanasoglou, Panayiotis P. & Brissimis, Sophocles N. & Delis, Matthaios D., 2008. "Bank-specific, industry-specific and macroeconomic determinants of bank profitability," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 18(2), pages 121-136, April.
    2. Laeven, Luc & Majnoni, Giovanni, 2003. "Loan loss provisioning and economic slowdowns: too much, too late?," Journal of Financial Intermediation, Elsevier, vol. 12(2), pages 178-197, April.
    3. Pasiouras, Fotios & Kosmidou, Kyriaki, 2007. "Factors influencing the profitability of domestic and foreign commercial banks in the European Union," Research in International Business and Finance, Elsevier, vol. 21(2), pages 222-237, June.
    4. Mr. Daniel C Hardy & Mr. Christian Schmieder, 2013. "Rules of Thumb for Bank Solvency Stress Testing," IMF Working Papers 2013/232, International Monetary Fund.
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    Cited by:

    1. Nicolae BALTES & Maria-Daciana RODEAN, 2017. "Efficiency of Operational Activity of Commercial Banks in Romania," Expert Journal of Finance, Sprint Investify, vol. 5(1), pages 86-93.

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