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Bank Profitability Challenges in Euro Area Banks: the Role of Cyclical and Structural Factors

Author

Listed:
  • Kok, Christoffer
  • Móré, Csaba
  • Pancaro, Cosimo

Abstract

Weak profitability among euro area banks is one key risk to financial stability. This special feature examines the main drivers influencing banks’ profitability, including bank-specific, macroeconomic and structural factors. The empirical part of the special feature finds that challenges appear to be mainly of a cyclical nature, although there may also be material structural impediments to reigniting bank profitability. JEL Classification: G00

Suggested Citation

  • Kok, Christoffer & Móré, Csaba & Pancaro, Cosimo, 2015. "Bank Profitability Challenges in Euro Area Banks: the Role of Cyclical and Structural Factors," Financial Stability Review, European Central Bank, vol. 1.
    • Handle: RePEc:ecb:fsrart:2015:0001:2
    Note: 508948
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    Citations

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    Cited by:

    1. Mr. Selim A Elekdag & Sheheryar Malik & Ms. Srobona Mitra, 2019. "Breaking the Bank? A Probabilistic Assessment of Euro Area Bank Profitability," IMF Working Papers 2019/254, International Monetary Fund.
    2. Amiya Kumar Mohapatra & Srirang Jha, 2018. "Bank Recapitalization in India: A Critique of Public Policy Concerns," FIIB Business Review, , vol. 7(1), pages 10-15, March.
    3. Emilia Bonaccorsi di Patti & Francesco Palazzo, 2020. "Bank profitability and macroeconomic conditions: Are business models different?," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 49(2), July.
    4. Ms. Enrica Detragiache & Mr. Thierry Tressel & Ms. Rima A Turk, 2018. "Where Have All the Profits Gone? European Bank Profitability Over the Financial Cycle," IMF Working Papers 2018/099, International Monetary Fund.
    5. de Bandt, Olivier & Camara, Boubacar & Maitre, Alexis & Pessarossi, Pierre, 2018. "Optimal capital, regulatory requirements and bank performance in times of crisis: Evidence from France," Journal of Financial Stability, Elsevier, vol. 39(C), pages 175-186.
    6. Ferreira, Cândida, 2021. "Efficiency of European Banks in the Aftermath of the Financial Crisis: A Panel Stochastic Frontier Approach," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 36(1), pages 103-124.
    7. Christopher F. Baum & Mustafa Caglayan & Bing Xu, 2021. "The impact of uncertainty on financial institutions: A cross‐country study," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3719-3739, July.
    8. Maria Sole Pagliari, 2023. "LSIs’ Exposures to Climate-Change-Related Risks: An Approach to Assess Physical Risks," International Journal of Central Banking, International Journal of Central Banking, vol. 19(1), pages 1-54, March.
    9. Mariarosa Borroni & Mariacristina Piva & Simone Rossi, 2016. "Determinants of Bank Profitability in the Euro Area: Has Anything Changed?," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1619, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    10. Petr Hanzlík & Petr Teplý, 2022. "Key factors of the net interest margin of European and US banks in a low interest rate environment," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 2795-2818, July.
    11. Matteo Farnè & Angelos T. Vouldis, 2020. "Does a bank's business model affect its capital and profitability?," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 49(2), July.
    12. Simone Rossi & Mariarosa Borroni & Andrea Lippi & Mariacristina Piva, 2018. "Determinants of Bank Profitability in the Euro Area: What Has Changed During the Recent Financial Crisis?," International Business Research, Canadian Center of Science and Education, vol. 11(5), pages 18-27, May.
    13. Bertay, Ata & Huizinga, Harry, 2019. "What are the Main Factors for the Subdued Profitability of Significant Banks in the Banking Union, and is the ECB’s Supervisory Response Conclusive and Exhaustive?," Other publications TiSEM 258c7cd4-90b3-4bb7-ba1b-4, Tilburg University, School of Economics and Management.
    14. Elekdag, Selim & Malik, Sheheryar & Mitra, Srobona, 2020. "Breaking the Bank? A Probabilistic Assessment of Euro Area Bank Profitability," Journal of Banking & Finance, Elsevier, vol. 120(C).
    15. Ghosh, Saibal, 2023. "Does climate legislation matter for bank lending? Evidence from MENA countries," Ecological Economics, Elsevier, vol. 212(C).
    16. Ms. TengTeng Xu & Kun Hu & Mr. Udaibir S Das, 2019. "Bank Profitability and Financial Stability," IMF Working Papers 2019/005, International Monetary Fund.
    17. Handro Paul Ovidiu, 2018. "Opinions Regarding Business Model In The European Banking System," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 0, pages 193-197, December.

    More about this item

    Keywords

    bank profitability; financial stability;

    JEL classification:

    • G00 - Financial Economics - - General - - - General

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