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Determinants of Bank Profitability in the Republic of Macedonia – a Panel Data Analysis

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  • Jordan Kjosevski
  • Mihail Petkovski

Abstract

The goal of this paper is to examine the determinants of profitability of the 16 banks in the Republic of Macedonia using quarterly data from Q1 2007 to Q4 2013. As a measure of profitability of the banks we will use the ratio of return on assets and the ratio of return on equity. Empirical results provide evidence that among internal factors of bank profitability, the most important ones are credit risk management capital to total assets ratio and operating expense management. From the external determinants, we found only the inflation to be significant for bank profitability.

Suggested Citation

  • Jordan Kjosevski & Mihail Petkovski, 2017. "Determinants of Bank Profitability in the Republic of Macedonia – a Panel Data Analysis," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 41-65.
    • Handle: RePEc:bas:econst:y:2017:i:3:p:41-65
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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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