The Profitability of the Consumer Credit Industry: Evidence from Europe
39 Pages Posted: 5 Aug 2010
Date Written: August 4, 2010
The paper focuses on the profitability of the consumer credit industry in Europe. Using consumer credit companies’ financial statement data, we investigate the effect of firm-specific and market-specific factors on the profitability of a sample of French, German, Italian and Spanish consumer credit companies over the period 2005-07. Results highlight that, among firm-level determinants, diversification of products and services within lending to households is the most influential driver of profit. With regards to market-specific factors, the profitability of consumer credit companies is positively affected by the size of the market, and negatively determined by the level of household debt burden.
Keywords: Financial companies, Consumer credit, Profitability, Cross-country
JEL Classification: G21
Suggested Citation: Suggested Citation