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The determinants of Serbian banking industry profitability

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  • Ana Knezevic
  • Dusan Dobromirov

Abstract

This article investigates the impact of bank-specific, market-specific and macroeconomic factors on the profitability of the banking sector in Serbia in the period 2004–2011. We use three panel datasets: for all banks in a sample and for domestic and foreign banks. The Hausman test was performed in order to test whether a fixed or a random effects model should be used in the regression analysis. The results are compared to the findings of previous research which was focused on EU countries. Moreover, the crisis effect on the profitability of banks in Serbia has been considered. The results show that bank-specific and market-specific factors have influence on bank profitability, but macroeconomic factors do not. We find that influence of liquidity ratio and a measure of financial development on profitability of banks are in contrast in Serbia compared to EU countries. The results also show that different factors influence profitability of domestic and foreign banks and that crisis has an opposite effect on profitability of domestic and foreign banks.

Suggested Citation

  • Ana Knezevic & Dusan Dobromirov, 2016. "The determinants of Serbian banking industry profitability," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 29(1), pages 459-474, January.
    • Handle: RePEc:taf:reroxx:v:29:y:2016:i:1:p:459-474
    DOI: 10.1080/1331677X.2016.1174390
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    Cited by:

    1. Leandro Coghi Bernardelli & Carlos Enrique Carrasco-Gutierrez, 2024. "Macroeconomic, industry-specific and bank-specific determinants of the profitability of Brazilian banks: dynamic panel evidence," Empirical Economics, Springer, vol. 67(2), pages 693-726, August.
    2. Vera Mirovic & Branimir Kalas & Ines Djokic & Nikola Milicevic & Nenad Djokic & Milos Djakovic, 2023. "Green Loans in Bank Portfolio: Financial and Marketing Implications," Sustainability, MDPI, vol. 15(7), pages 1-14, March.

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