Relationship between banks’ profitability performance and banks risk exposure in the case of Macedonian banks
Relationship between banks’ profitability performance and banks risk exposure in the case of Macedonian banks

Summary/Abstract: The subject of this paper is to determine the relationship between the profitability and the different types of risk in the Macedonian banking industry. We measure the profitability by the return on assets (ROA), net interest margin (NIM) and the profit. Panel VECM model is applied on the sample of 14 out of 15 banks in the Macedonian banking system in the period between the years from 2012 to 2016.Our findings show that the credit risk, the interest rate risk and the liquidity risk have significant impact on the bank’s profitability, while the currency risk indicator proved no statistical importance for the profitability of the Macedonian banking sector. According to the presented results, the credit risk has a positive, while the interest rate risk and the liquidity risk has a negative relation with the bank’s profitability.

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