Analysis of Income and Profitability Indicators in Banking Sectors During the Period 1995 - 2009: Post-communist vs. OECD Countries

Volume: 1/2017
Issue: 1
Author: Aleš Rod, Jonáš Rais
Keywords: Bank, post-communist economy, profitability, interest income, noninterest income, fees and commissions

Abstract: This article presents an analysis of income and profitability indicators for the banking sectors of six post-communist countries and compares them with a group of eighteen OECD countries without a “communist” past. The analysis focuses on five relative indicators (interest income/fees and commissions income; fees and commissions/bank assets; interest income/bank assets; profit/assets; fees and commissions/non-interest income), which are subsequently controlled with macroeconomic indicators (GDP, interest rate and inflation) for the period 1995 - 2009. The results of the econometric model corresponded with three out of the five assumptions made about the effects of post-communism. However, only the hypothesis that post-communist countries used their assets for higher net income from fees and commissions is significantly verified. Discrepancies were explained by x-inefficiencies on the cost side and a constant pressure on revenue stream diversification, which is in accordance with scholarly literature.

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