Bank Profitability Over Different Business Cycles Regimes: Evidence from Panel Threshold Models
20 Pages Posted: 11 Jun 2007
Date Written: June 2007
The goal of this study is to identify whether bank profitability, defined as interest, non-interest, and profits before taxes, in the Greek banking system is affected by business cycle conditions through the methodology of panel multiple threshold models. After defining business regimes for the Greek economy over the period 1990-2006, the empirical findings display that there exists a positive relationship between bank profitability and the business cycle and this positive cyclicality remains robust in either phase of the business cycle (except in the case for non-interest income).
Keywords: profitability, business cycles, Greek banks, panel threshold models
JEL Classification: C23, E32, G21
Suggested Citation: Suggested Citation