Year: 2025
Type: article
Abstract: This study explores the factors influencing bank profitability, with a particular focus on the European banking sector. It seeks to enhance our understanding of the financial drivers behind banks operating in this diverse and complex market. Through comprehensive empirical analysis, the research identifies key elements that affect profitability across European banks. Using a dataset of 31 major European banks, covering the period from 2013 to 2023, advanced econometric methods, such as panel data analysis, are employed to assess various determinants of bank profitability. The study considers internal factors specific to each bank, drawn from their financial data, alongside macroeconomic indicators like GDP growth and inflation, sourced from the World Bank. The findings reveal that both bank-specific factors, such as size and capital ratios, and broader economic conditions, including inflation and the effects of the COVID-19 pandemic, have a significant impact on profitability. The results underscore the importance of maintaining adequate financial reserves, effective loan management, and the ability to navigate economic uncertainties, especially during crises. Among the econometric models evaluated, the fixed-effects model proved to be the most accurate in explaining variations in bank profitability.
DOI: 10.14419/dxbdcd55
Authors: Ardita Bylo, Sosina Meçaj
Institution: University of New York Tirana
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4410672012