Determinants of Bank Profitability in Western European Countries Evidence from System GMM Estimates

Abstract

In this study we tried to identify the determinants of profitability for the countries of Western Europe during the distress period 2007-2011. Our sample includes 322 banks we subdivided the sample into two sub sample GIPSI countries affected by the crisis (Greece, Italy, Portugal, Spain and Ireland) and the other countries of Western Europe. We opted for several specific determinants in the bank as well as macroeconomic factors. To take account of the persistence of the benefit we used dynamic panel data (system GMM). Our results demonstrate that bank profitability depends on proxies considered and the situation of country.