Determinants of Portuguese Banks’ Profitability – An Update
In this study, we assess the main determinants of banks' profitability in Portugal over the period 2015–2018. We divide the factors that can influence bank profitability into several groups: management quality, credit quality, capital adequacy, liquidity (internal bank factors), and GDP growth...
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University of the Algarve - ESGHT - CIEO
2021-07-01
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| Series: | Tourism & Management Studies |
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| Online Access: | https://www.tmstudies.net/index.php/ectms/article/view/1394 |
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| author | Maria Clara Pires Maria Basílio Carlos Borralho |
| author_facet | Maria Clara Pires Maria Basílio Carlos Borralho |
| author_sort | Maria Clara Pires |
| collection | DOAJ |
| description | In this study, we assess the main determinants of banks' profitability in Portugal over the period 2015–2018. We divide the factors that can influence bank profitability into several groups: management quality, credit quality, capital adequacy, liquidity (internal bank factors), and GDP growth (an external factor). The panel dataset is composed of annual report data for the 18 major banks operating in Portugal, representing about 98% of the Portuguese banking product. Profitability has been a persistent challenge for banks since the global financial crisis. Moreover, the Portuguese banking system had been facing several structural problems, which makes this topic particularly relevant. The profitability proxy used is the return on equity (ROE). The empirical strategy followed was pooled OLS. Variables relevant for explaining Portuguese banks' profitability are capital adequacy, liquidity and credit risk. As expected, the results show that capital adequacy (TIER 1) and credit quality (CVCT) have a negative and significant impact on banks' profitability, whereas liquidity (RAL) has a positive impact. |
| format | Article |
| id | doaj-art-277da67fd60b45e08ad6eb5a1a5ec27b |
| institution | Kabale University |
| issn | 2182-8466 |
| language | English |
| publishDate | 2021-07-01 |
| publisher | University of the Algarve - ESGHT - CIEO |
| record_format | Article |
| series | Tourism & Management Studies |
| spelling | doaj-art-277da67fd60b45e08ad6eb5a1a5ec27b2025-01-08T11:16:24ZengUniversity of the Algarve - ESGHT - CIEOTourism & Management Studies2182-84662021-07-011736370Determinants of Portuguese Banks’ Profitability – An Update Maria Clara Pires 0Maria Basílio 1Carlos Borralho2Instituto Politécnico de Beja Instituto Politécnico de Beja Instituto Politécnico de BejaIn this study, we assess the main determinants of banks' profitability in Portugal over the period 2015–2018. We divide the factors that can influence bank profitability into several groups: management quality, credit quality, capital adequacy, liquidity (internal bank factors), and GDP growth (an external factor). The panel dataset is composed of annual report data for the 18 major banks operating in Portugal, representing about 98% of the Portuguese banking product. Profitability has been a persistent challenge for banks since the global financial crisis. Moreover, the Portuguese banking system had been facing several structural problems, which makes this topic particularly relevant. The profitability proxy used is the return on equity (ROE). The empirical strategy followed was pooled OLS. Variables relevant for explaining Portuguese banks' profitability are capital adequacy, liquidity and credit risk. As expected, the results show that capital adequacy (TIER 1) and credit quality (CVCT) have a negative and significant impact on banks' profitability, whereas liquidity (RAL) has a positive impact.https://www.tmstudies.net/index.php/ectms/article/view/1394banksbasel accordprofitabilitypooled ols |
| spellingShingle | Maria Clara Pires Maria Basílio Carlos Borralho Determinants of Portuguese Banks’ Profitability – An Update Tourism & Management Studies banks basel accord profitability pooled ols |
| title | Determinants of Portuguese Banks’ Profitability – An Update |
| title_full | Determinants of Portuguese Banks’ Profitability – An Update |
| title_fullStr | Determinants of Portuguese Banks’ Profitability – An Update |
| title_full_unstemmed | Determinants of Portuguese Banks’ Profitability – An Update |
| title_short | Determinants of Portuguese Banks’ Profitability – An Update |
| title_sort | determinants of portuguese banks profitability an update |
| topic | banks basel accord profitability pooled ols |
| url | https://www.tmstudies.net/index.php/ectms/article/view/1394 |
| work_keys_str_mv | AT mariaclarapires determinantsofportuguesebanksprofitabilityanupdate AT mariabasilio determinantsofportuguesebanksprofitabilityanupdate AT carlosborralho determinantsofportuguesebanksprofitabilityanupdate |