Determinants of Profitability of Polish Banks: The Role of Foreign Banks

  • Małgorzata Pawłowska

Abstract

The aim of this study is to examine the effect of bank-specific and macroeconomic determinants of bank profitability in Poland using an empirical framework that incorporates the traditional Structure-Conduct-Performance (SCP) hypothesis as well as the Relative Market Power (RMP) hypothesis. This paper also examines the overall effect that financial structure and macroeconomic conditions had during the global financial crisis of 2008. Finally, this paper tests the effect of foreign capital on the profitability of Polish banks and attempts to determine if there is a link between the context of the parent banks and the profitability of their affiliates during the global financial crisis of 2008 and the debt crisis in the Eurozone. Empirical results based on panel data sets containing both micro-level and macro-level data are ambiguous, and we found evidence of the RMP hypothesis only. Furthermore, this paper found a positive correlation between the context of parent banks and the profitability of their affiliates. Finally, we determined that the profitability of commercial banks in Poland was contingent upon the business cycle.

Author Biography

Małgorzata Pawłowska
Małgorzata Pawłowska graduated Warsaw University (M.Sc. in Mathematics), completed Post Graduate Study in Management and Finance at Warsaw School of Economics, doctoral Studies at Warsaw School of Economics in the Collegium of Management and Finance (PhD in Economics in 2004) and habilitation on thesis entitled: Competition in the banking sector: theory and empirical results in the Collegium of Management and Finance in 2015. My current position is Economic Advisor in Economic Institute at the National Bank of Poland and Assistant Professor at Warsaw School of Economics. Co-author of many reports at the NBP and author of many papers concerning efficiency and competition of the Polish banking sector, bank-firm relationships and credit rationing. Her current research focuses on competition and the structure of the Polish and EU banking market and lending market.
Published
2016-05-20
How to Cite
Pawłowska, M. (2016). Determinants of Profitability of Polish Banks: The Role of Foreign Banks. Econometric Research in Finance, 1(1), 23 - 46. https://doi.org/10.33119/ERFIN.2016.1.1.2
Section
Articles