Determinants of Commercial Bank Profitability in Mexico
Abstract The aim of the present work is to identify the main determinants of profitability for commercial banks established in Mexico. A database of 45 banks representing virtually the whole world of commercial banking in the period 2007-2013 was used. Dynamic models using Arellano-Bover/Blundell-Bond estimators with an error that follows an MA(1) process were employed along with static models having random effects and Hausman-Taylor estimator. Findings suggest that the profitability of commercial banking is sustained by the level of capital, the charging of commissions and fees, and control of operating expenses, as well as certain market entry barriers and obstacles to competition that provoke a relatively high persistence of profitability.
| Main Author: | |
|---|---|
| Format: | Digital revista |
| Language: | English |
| Published: |
Universidad de Guadalajara
2015
|
| Online Access: | http://www.scielo.org.mx/scielo.php?script=sci_arttext&pid=S1870-66222015000100097 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | Abstract The aim of the present work is to identify the main determinants of profitability for commercial banks established in Mexico. A database of 45 banks representing virtually the whole world of commercial banking in the period 2007-2013 was used. Dynamic models using Arellano-Bover/Blundell-Bond estimators with an error that follows an MA(1) process were employed along with static models having random effects and Hausman-Taylor estimator. Findings suggest that the profitability of commercial banking is sustained by the level of capital, the charging of commissions and fees, and control of operating expenses, as well as certain market entry barriers and obstacles to competition that provoke a relatively high persistence of profitability. |
|---|