IDEAS home Printed from https://ideas.repec.org/a/ers/ijebaa/vviiy2019i1p3-34.html
   My bibliography  Save this article

Establishing the Contributing Factors to the Resurrection of PIIGS Banks Following the Crisis: A Panel Data Analysis

Author

Listed:
  • Esteban Miguélez
  • Jonathan Spiteri
  • Simon Grima

Abstract

In this article, we analyse empirically the factors that allowed for the improvement and strengthening of the banking systems in Greece, Ireland, Italy, Portugal and Spain (known as the PIIGS) during the post-financial crisis period 2011-2016. We use panel data on 200 banks and measure their financial soundness using the z-score. Our results show that the improvement is mainly due to managerial factors. To ensure stability, banks must monitor their loans and avoid non-performing loans. The public authorities should try to control banks’ size, encouraging medium-sized banks since these tend to perform better on average while limiting the existence of banks, whose size and importance (despite economies of scale) can destabilize the entire system in case of bankruptcy. Finally, different from previous studies, we include herein the refinancing programmes into the analysis of financial soundness and show that the financial assistance programs have been necessary to ensure the recovery of the banking systems.

Suggested Citation

  • Esteban Miguélez & Jonathan Spiteri & Simon Grima, 2019. "Establishing the Contributing Factors to the Resurrection of PIIGS Banks Following the Crisis: A Panel Data Analysis," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 3-34.
    • Handle: RePEc:ers:ijebaa:v:vii:y:2019:i:1:p:3-34
    as

    Download full text from publisher

    File URL: https://www.ijeba.com/journal/193/download
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Beckmann, Rainer, 2007. "Profitability of Western European banking systems: panel evidence on structural and cyclical determinants," Discussion Paper Series 2: Banking and Financial Studies 2007,17, Deutsche Bundesbank.
    2. Climent Serrano, Salvador, 2013. "La reestructuración del sistema bancario español tras la crisis y la solvencia de las entidades financieras. Consecuencias para las cajas de ahorros," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 16(2), pages 136-146.
    3. Ion Lapteacru & Emmanuelle Nys, 2011. "L'impact de la concurrence sur l'efficience des banques. Le cas des peco," Revue économique, Presses de Sciences-Po, vol. 62(2), pages 313-329.
    4. Demirguc, Asli & Huizinga, Harry, 1999. "Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence," The World Bank Economic Review, World Bank, vol. 13(2), pages 379-408, May.
    5. Simon Grima & Luca Caruana, 2017. "The Effect of the Financial Crisis on Emerging Markets: A Comparative Analysis of the Stock Market Situation Before and After," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 727-753.
    6. 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.
    7. Berger, Allen N, 1995. "The Relationship between Capital and Earnings in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(2), pages 432-456, May.
    8. Barros, Carlos Pestana & Ferreira, Candida & Williams, Jonathan, 2007. "Analysing the determinants of performance of best and worst European banks: A mixed logit approach," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 2189-2203, July.
    9. Molyneux, Philip & Thornton, John, 1992. "Determinants of European bank profitability: A note," Journal of Banking & Finance, Elsevier, vol. 16(6), pages 1173-1178, December.
    10. Elsas, Ralf & Hackethal, Andreas & Holzhäuser, Markus, 2010. "The anatomy of bank diversification," Journal of Banking & Finance, Elsevier, vol. 34(6), pages 1274-1287, June.
    11. Dima, Bogdan & Dincă, Marius Sorin & Spulbăr, Cristi, 2014. "Financial nexus: Efficiency and soundness in banking and capital markets," Journal of International Money and Finance, Elsevier, vol. 47(C), pages 100-124.
    12. Iulia Iuga, 2013. "Analysis Of The Banking System'S Concentration Degree In Eu Countries," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(15), pages 1-16.
    13. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2006. "Bank concentration, competition, and crises: First results," Journal of Banking & Finance, Elsevier, vol. 30(5), pages 1581-1603, May.
    14. Uhde, André & Heimeshoff, Ulrich, 2009. "Consolidation in banking and financial stability in Europe: Empirical evidence," Journal of Banking & Finance, Elsevier, vol. 33(7), pages 1299-1311, July.
    15. Abdelaziz Rouabah, 2006. "La sensibilité de l'activité bancaire aux chocs macroéconomiques : une analyse en panel sur des données de banques luxembourgeoises," BCL working papers 21, Central Bank of Luxembourg.
    16. Christiaan Kwaak & Sweder Wijnbergen, 2017. "Sovereign debt and bank fragility in Spain," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(3), pages 511-543, August.
    17. Ion Lapteacru, 2016. "On the consistency of the Z-score to measure the bank risk," Working Papers hal-01301846, HAL.
    18. repec:laf:wpaper:cr1605 is not listed on IDEAS
    19. Marcello Pagnini & Paola Rossi & Valerio Vacca & Michael Sigmund & Ulrich Gunter & Gerald Krenn, 2017. "How Do Macroeconomic and Bank-specific Variables Influence Profitability in the Austrian Banking Sector? Evidence from a Panel Vector Autoregression Analysis," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 46(3), pages 555-586, November.
    20. M. Hanias & P. Curtis & E. Thalassinos, 2012. "Time Series Prediction with Neural Networks for the Athens Stock Exchange Indicator," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 23-32.
    21. Eleftherios I. Thalassinos & Theodoros Stamatopoulos & Pantelis E. Thalassinos, 2015. "The European Sovereign Debt Crisis and the Role of Credit Swaps," World Scientific Book Chapters, in: Anastasios G Malliaris & William T Ziemba (ed.), THE WORLD SCIENTIFIC HANDBOOK OF FUTURES MARKETS, chapter 20, pages 605-639, World Scientific Publishing Co. Pte. Ltd..
    22. Juan Rafael Ruiz & Patricia Stupariu & Angel Vilariño, 2016. "The crisis of Spanish savings banks," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(6), pages 1455-1477.
    23. Christoph Aymanns & Carlos Caceres & Christina Daniel & Miss Liliana B Schumacher, 2016. "Bank Solvency and Funding Cost," IMF Working Papers 2016/064, International Monetary Fund.
    24. Căpraru Bogdan & Ihnatov Iulian, 2015. "Determinants Of Bank’s Profitability In EU15," Scientific Annals of Economics and Business, Sciendo, vol. 62(1), pages 93-101, April.
    25. Antonio Trujillo-Ponce, 2013. "What determines the profitability of banks? Evidence from Spain," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(2), pages 561-586, June.
    26. Ion Lapteacru, 2017. "The Z-score is dead, long live the Z-score! A new way to measure bank risk," Working Papers hal-01518652, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jéfferson Colombo & Peter Wanke & Jorge Antunes & Abul Kalam Azad, 2022. "Unveiling endogeneity between competition and efficiency in European banks: a robust econometric-neural network approach," SN Business & Economics, Springer, vol. 2(3), pages 1-46, March.
    2. Glen Gauci & Simon Grima, 2020. "The Impact of Regulatory Pressures on Governance on the Performance of Public Banks’ with a European Mediterranean Region Connection," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 360-387.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexandra Horobet & Magdalena Radulescu & Lucian Belascu & Sandra Maria Dita, 2021. "Determinants of Bank Profitability in CEE Countries: Evidence from GMM Panel Data Estimates," JRFM, MDPI, vol. 14(7), pages 1-23, July.
    2. TOMULEASA, Ioana-Iuliana & COCRIŞ, Vasile, 2014. "Measuring The Financial Performance Of The European Systemically Important Banks," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 18(4), pages 31-51.
    3. Tan, Yong, 2016. "The impacts of risk and competition on bank profitability in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 40(C), pages 85-110.
    4. Fakhri J. Hasanov & Nigar Bayramli & Nayef Al-Musehel, 2018. "Bank-Specific and Macroeconomic Determinants of Bank Profitability: Evidence from an Oil-Dependent Economy," IJFS, MDPI, vol. 6(3), pages 1-21, September.
    5. Faluk Shair & Na Sun & Sun Shaorong & Firdos Atta & Muhammad Hussain, 2019. "Impacts of risk and competition on the profitability of banks: Empirical evidence from Pakistan," PLOS ONE, Public Library of Science, vol. 14(11), pages 1-27, November.
    6. Tan, Yong, 2017. "The impacts of competition and shadow banking on profitability: Evidence from the Chinese banking industry," The North American Journal of Economics and Finance, Elsevier, vol. 42(C), pages 89-106.
    7. Campmas, Alexandra, 2020. "How do European banks portray the effect of policy interest rates and prudential behavior on profitability?," Research in International Business and Finance, Elsevier, vol. 51(C).
    8. Martins, António Miguel & Serra, Ana Paula & Stevenson, Simon, 2019. "Determinants of real estate bank profitability," Research in International Business and Finance, Elsevier, vol. 49(C), pages 282-300.
    9. J.A. Bikker & Tobias M. Vervliet, 2017. "Bank Profitability and Risk-Taking under Low Interest Rates," Working Papers 17-10, Utrecht School of Economics.
    10. Muhammad Haris & Yong Tan & Ali Malik & Qurat Ul Ain, 2020. "A Study on the Impact of Capitalization on the Profitability of Banks in Emerging Markets: A Case of Pakistan," JRFM, MDPI, vol. 13(9), pages 1-21, September.
    11. Djalilov, Khurshid & Piesse, Jenifer, 2016. "Determinants of bank profitability in transition countries: What matters most?," Research in International Business and Finance, Elsevier, vol. 38(C), pages 69-82.
    12. Yong Tan, 2020. "Competition and Profitability in the Chinese Banking Industry: New Evidence from Different Ownership Types," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 503-526, September.
    13. Laura Baselga-Pascual & Olga Del Orden-Olasagasti & Antonio Trujillo-Ponce, 2018. "Toward a More Resilient Financial System: Should Banks Be Diversified?," Sustainability, MDPI, vol. 10(6), pages 1-16, June.
    14. Mirzaei, Ali & Moore, Tomoe & Liu, Guy, 2013. "Does market structure matter on banks’ profitability and stability? Emerging vs. advanced economies," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2920-2937.
    15. 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).
    16. J.A. Bikker & Tobias M. Vervliet, 2017. "Bank Profitability and Risk-Taking under Low Interest Rates," Working Papers 17-10, Utrecht School of Economics.
    17. Maria Rosa Borges & Ana Sofia Tavares, 2020. "Determinants of Bank Performance in the Context of Crisis: A Panel Data Analysis for Portugal," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 674-686.
    18. Phan, Dinh Hoang Bach & Narayan, Paresh Kumar & Rahman, R. Eki & Hutabarat, Akhis R., 2020. "Do financial technology firms influence bank performance?," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    19. Saona, Paolo, 2016. "Intra- and extra-bank determinants of Latin American Banks' profitability," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 197-214.
    20. Dinh Phan & Paresh Kumar Narayan & Akhis R. Hutabarat, 2018. "Do Financial Technology Firms Influence Bank Performance?," Working Papers WP/19/2018, Bank Indonesia.

    More about this item

    Keywords

    Panel Data; European Banks; PIIGs; Crisis; Banking System.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ers:ijebaa:v:vii:y:2019:i:1:p:3-34. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marios Agiomavritis (email available below). General contact details of provider: https://ijeba.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.