What Determines the Profitability of Commercial Banks? ew Evidence from Switzerland

Abstract

This paper analyzes the profitability of commercial banks in Switzerland over the time period from 1999 to 2006. Our sample includes 1’919 observations from 453 banks. Besides bank-specific characteristics, we include a set of macroeconomic and industry-specific variables into our regression analyses. Our results show that there exist significant differences in profitability between commercial banks in Switzerland and that these differences can to a large extent be explained by the factors included in our analysis. Also, our model specification, which includes several variables that have not been considered before, generates new insights for a better understanding of banking performance.