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Organizational-level profitability determinants in commercial banks: Swedish evidence
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law.ORCID iD: 0000-0001-5731-0489
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law.
2018 (English)In: Journal of economic studies, ISSN 0144-3585, E-ISSN 1758-7387, Vol. 45, no 6, p. 1175-1191Article in journal (Refereed) Published
Abstract [en]

Purpose The purpose of this paper is to examine organizational-level determinants of commercial bank profitability. Design/methodology/approach Using bank-level longitudinal panel data for the 2005-2014 period, this study conducts univariate and multivariate statistical analyses, i.e. ordinary least squares (OLS), fixed-effects and feasible generalized least-squares (FGLS) regressions, to analyze profitability variables in Swedish commercial banks. Findings The findings indicate that the organizational-level determinants growth, lagged profitability and capital adequacy are positively related to banks' current profitability. No relationship was found between banks' size and their profitability. Moreover, no relationship was found between the macroeconomic control variable gross domestic product (GDP) and bank profitability. Practical implications Given that organizational-level determinants explain sustainable bank profitability, the findings can be used by bank managers as a basis for low-risk bank policy formulation, and by regulators in monitoring banks relative to international standards (i.e. the Basel Accords). Originality/value To the best of the authors' knowledge, this is the first study to investigate determinants of bank profitability in Sweden, a country with a strong tradition of bank-based financing, with previous experience of a domestic bank crisis in the 1990s, and where the recent global financial crisis had relatively little impact on domestic banks.

Place, publisher, year, edition, pages
2018. Vol. 45, no 6, p. 1175-1191
Keywords [en]
Profitability, Regulation, Bank, Resource-based approach, Organizational-level determinants
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:miun:diva-35044DOI: 10.1108/JES-07-2017-0182ISI: 000450078700005Scopus ID: 2-s2.0-85056581994OAI: oai:DiVA.org:miun-35044DiVA, id: diva2:1268006
Available from: 2018-12-04 Created: 2018-12-04 Last updated: 2018-12-10Bibliographically approved

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Öhman, PeterYazdanfar, Darush

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