Determinants of Bank Profitability Before and During the Crisis: Evidence from Switzerland

Abstract

This paper analyzes the profitability of 453 commercial banks in Switzerland over the period from 1999 to 2008. In order to take into account the impacts of the recent financial crisis, we additionally consider the pre-crisis period and the crisis years 2007-2008 separately. Our profitability determinants include bank-specific characteristics as well as industry-specific and macroeconomic factors, some of which have not been considered in previous studies. The inclusion of these additional factors as well as the separate consideration of the crisis years allow us to gain new insights into what determines the profitability of commercial banks.

Keywords: Banking Profitability, Macroeconomic Impact on Banking Profitability, Financial Structure, Ownership

JEL Classification: D21, G21, E44, C23, G32, L25