Investigating the Causality between Bank Profitability and Economic Growth: Evidence from Central and Eastern Europe

This article investigates the impact of bank profitability on economic growth for a sample of 16 countries from Central and Eastern Europe during the period from 2000-2021. While low bank profitability is considered a risk for economic growth, the extent to which higher levels of profitability are c...

Ausführliche Beschreibung

Gespeichert in:
Bibliographische Detailangaben
Veröffentlicht in:Finance a úvěr Jg. 73; H. 3; S. 303 - 327
Hauptverfasser: Petkovski, Mihail, Kjosevski, Jordan, Stojkov, Aleksandar, Petkovska, Katerina Bartasek
Format: Journal Article
Sprache:Englisch
Veröffentlicht: Prague Charles University, Faculty of Social Sciences 01.01.2023
Schlagworte:
Banking industry
Economic growth
Profitability
Profits
Eastern Europe
ISSN:0015-1920, 2464-7683
Online-Zugang:Volltext
Tags: Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
Beschreibung
Zusammenfassung:This article investigates the impact of bank profitability on economic growth for a sample of 16 countries from Central and Eastern Europe during the period from 2000-2021. While low bank profitability is considered a risk for economic growth, the extent to which higher levels of profitability are conducive to growth remains an open question. The remarkably consistent empirical results obtained using multiple econometric techniques uncover a statistically and economically significant positive relationship. A one percent increase in banks 'return on assets is associated with higher economic growth in the range of 0.625 and 0.635 percentage points. When richer dynamics of bank profitability are explored, the impact of past realisations of bank profitability on growth does not endure in the long run. We also performed a battery of country-specific tests to examine the bidirectional causality between bank profitability and economic growth in the selected countries.
Bibliographie:ObjectType-Article-1
SourceType-Scholarly Journals-1
ObjectType-Feature-2
content type line 14
ISSN:0015-1920
2464-7683
DOI:10.32065/CJEF.2023.03.04