Analyzing variables of bank profitability:focus on exogenous variables in commercial banks in Germany
Analyzing variables of bank profitability:focus on exogenous variables in commercial banks in Germany

Summary/Abstract: Permanent dynamic changes in the banking industry generate pressure for identifying and searching new products in ensuring the adequate level of bank profit as profitability represents the major motive for each industry. In order to make a contribution toward existing knowledge of bank profitability and its determinates, the study sought to identify the key internal profits determinates in the commercial banks which are controllable by the bank management. To verify the expectation for the influence of certain internal variables the focus of the study has been done with data for the German banks. Regression analyses of the panel data set comprising 1500 observations of 300 banks in the period 1994-2005 verify some of the previous findings made on the panel data with EU region, albeit some findings are different. The results of the study identified that Equity to Total Assets and Net Loans to Total Assets have positive relationship with bank profitability expressed by ROAA, while as Net Loans/ Customer and Short term Financing and Cost to Income are negatively significant determinates influencing bank profitability in the commercial banks in Germany. Total Assets, Interest Income/Noninterest Income and Total Operative Income are insignificant determinates for the bank profitability expressed in Return in Average Assets.

• Details
• Contents