Work detail

Profitability of Foreign Owned Banks in Central and Eastern European Countries

Author: Bc. Andrea Kufnerová
Year: 2013 - summer
Leaders: PhDr. Jitka Lešanovská
Consultants:
Work type: Bachelors
Language: English
Pages: 55
Awards and prizes:
Link:
Abstract: Since foreign owned banks create important market shares in the banking
sectors in the Central and Eastern European (CEE) countries, the aim of this study is
to detect the determinants of the profitability of foreign banks operating in this region.
In our study, we focus on the sample of foreign owned banks in 10 CEE countries
during the period 2003–2011. We investigate, using the econometric analysis, the
impact of bank-specific, macroeconomic and market structure characteristics as well
as the euro area development on the profitability of foreign owned banks. We also
examine whether the impact of these determinants differs in the period before the
global financial crisis and during the crisis. Our results suggest significant influence
of the bank-specific factors on the profitability of foreign owned banks and that the
sensitivity of profitability to bank-specific characteristics has even risen during the
crisis period. Surprisingly, we do not find the relation between the market structure in
the host country, where the banks operate, and the profitability similarly to the
participation of the host country in the European Union and the euro area. However,
some of the macroeconomic variables capturing both the host country and the euro
area developments affect bank profitability but in some cases differently in the precrisis
and the crisis period.

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