Determinants of commercial banks' profitability. Evidence from Hungary
The result's identifiers
Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F62156489%3A43110%2F18%3A43914385" target="_blank" >RIV/62156489:43110/18:43914385 - isvavai.cz</a>
Result on the web
<a href="https://doi.org/10.11118/actaun201866051325" target="_blank" >https://doi.org/10.11118/actaun201866051325</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.11118/actaun201866051325" target="_blank" >10.11118/actaun201866051325</a>
Alternative languages
Result language
angličtina
Original language name
Determinants of commercial banks' profitability. Evidence from Hungary
Original language description
This paper aims to find out whether bank-specific (internal) factors impact on the profitability of commercial banks in Hungary for 16 a year period ranging from 2000 - 2015. The study employs a sample of twenty-six commercial banks with four hundred sixteen observations. The study employs return on average assets (ROAA) as a proxy for bank profitability, and it also considers bank-specific (internal) factors as independent variables. These include asset quality (non-performing loans), overhead costs, bank size, net interest margin, and liquidity risk plus capital adequacy ratio. The study uses panel regressions, descriptive statistics and correlation analysis for the investigations. The panel regression models are to estimate the impact of bank-specific (internal) factors on bank profitability. The Hausman specification test was conducted on the panel regression models in order to identify the best and appropriate model for the study. The empirical findings reveal that non-performing loans, overhead costs and liquidity had a significant negative impact on bank profitability as bank size had a significant positive impact on profitability. However, net interest margin and capital adequacy ratio had no impact on bank profitability. The study concludes that bank size and asset quality are bank-specific factors that have the biggest impact on commercial banks' profitability in Hungary for the period under investigation. The study recommends that commercial banks should endeavor to manage and reduce overhead costs to be able to earn more profits since overhead costs adversely affect bank profitability. More so, commercial banks' managers should regularly monitor credit and liquidity risk indicators as well as pursuing diversification policies of income sources while upholding optimisation of operational costs.
Czech name
—
Czech description
—
Classification
Type
J<sub>SC</sub> - Article in a specialist periodical, which is included in the SCOPUS database
CEP classification
—
OECD FORD branch
50206 - Finance
Result continuities
Project
—
Continuities
S - Specificky vyzkum na vysokych skolach
Others
Publication year
2018
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů
Data specific for result type
Name of the periodical
Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis
ISSN
1211-8516
e-ISSN
—
Volume of the periodical
66
Issue of the periodical within the volume
5
Country of publishing house
CZ - CZECH REPUBLIC
Number of pages
11
Pages from-to
1325-1335
UT code for WoS article
—
EID of the result in the Scopus database
2-s2.0-85056287178