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Ï»¿Performance In European Banking Sector Based On A Comparative Analysis Of Non-Performing Loans And Net Interest Income

Author

Listed:
  • Adela SOCOL

    (“1 Decembrie 1918†University of Alba Iulia)

  • Oana Raluca IVAN

    (“1 Decembrie 1918†University of Alba Iulia)

  • Dan Ioan TOPOR

    (“1 Decembrie 1918†University of Alba Iulia)

  • Attila TAMAS

    (“1 Decembrie 1918†University of Alba Iulia)

  • Nina SINIȚÎN

    (Doctoral School of Accounting, “1 Decembrie 1918†University of Alba Iulia)

Abstract

After the financial crisis of 2008, bank profitability became a crucial subject for investors, whose expectations were particularly affected by banks' asset quality and various legal and regulatory issues. In the context of the 2020-2021 COVID-19 pandemic, aspects of bank profitability worsened. For example, data from the European Central Bank indicates euro area banks' ROE fell from 5.3% in 2019 to 1.3% in 2020. We developed a study based on a panel database for 19 European Union countries over the period 2008-2020. The ordinary least squares method using stationarity was employed to determine whether return on equity is influenced by asset quality, operational costs or level of interest. The variables used in our analysis are non-performing loans, loan loss provision ratio and net interest income. Results demonstrate the impact of the variables on banking performance measured through return on equity.

Suggested Citation

  • Adela SOCOL & Oana Raluca IVAN & Dan Ioan TOPOR & Attila TAMAS & Nina SINIȚÎN, 2022. "Ï»¿Performance In European Banking Sector Based On A Comparative Analysis Of Non-Performing Loans And Net Interest Income," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(24), pages 1-16.
    • Handle: RePEc:alu:journl:v:2:y:2022:i:24:p:16
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    References listed on IDEAS

    as
    1. Camelia BURJA, 2020. "Economic Performance In Viticulture: Evidence From Romania," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(22), pages 11-18.
    2. David Bholat & Rosa M. Lastra & Sheri M. Markose & Andrea Miglionico & Kallol Sen, 2018. "Non-performing loans at the dawn of IFRS 9: regulatory and accounting treatment of asset quality," Journal of Banking Regulation, Palgrave Macmillan, vol. 19(1), pages 33-54, January.
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    More about this item

    Keywords

    banking performance; ROE; non-performing loans; loan loss provision ratio; net interest income;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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