Bank Profitability Over Different Business Cycles Regimes: Evidence from Panel Threshold Models

Examining the Correlation Between Islamic Banks Profitability and the Business Cycle in Indonesia

“…The result of this study implies that the increase in the business cycle would lead to higher Islamic banks' profitability. This result supported by several previous research in the context of conventional banks such as Albertazzi & Gambacorta (2009) and Apergis (2009). Those studies explained that business activities indicate the total output produced by companies, thus measuring the economic condition.…”

“…This study explained that during the financial crisis, which indicates the degrading of GDP level would trigger-down the banks' profitability. The result of this study also supported by Apergis's (2009) research result, which discovered that the banks' profitability in Greek banks has a procyclical correlation with the business cycle covering the period from 1990-2006.…”

A new macro stress testing approach for financial realignment in the Eurozone

“…When there is a procyclical relationship between bank profitability and business cycles, during the booming phases of the cycle there is a stronger impact on bank profitability, whilst during the recessionary phases, the performance of banking loan portfolios is jeopardised. This leads to credit losses and, thus, to lower banking profits (Apergis, 2009). To address this issue in our economy, we perform a rolling window approach that surfs over the business cycle in order to examine the VaR evolution over time.…”

Bank Profitability and Macroeconomy: Evidence From Lithuania

“…Cross-country panel data sets have been investigated by Molyneux and Thornton (1992), Demirguc-Kunt and Huizinga (1999), Abreu and Mendes (2002), Goddard et al (2004), Pasiouras and Kosmidou (2007), Albertazzi andGambacorta (2009), Goddard et al (2010), Lee and Hsieh (2013), Shehzad et al (2013), Gambacorta et al (2014), Dietrich and Wanzenried (2014). Examples of single countries' analysis are studies of Andersen et al (2008), Athanasoglou et al (2008), Apergis (2009), García-Herrero et al (2009), Coffinet and Lin (2010, Wanzenried (2011), Sufian (2011), Kanas et al (2012), Rumler and Waschiczek (2012), Trujillo-Ponce (2013), Berlemann et al (2014), Perman et al (2015), Chronopoulos et al (2015). Certainly, the empirical results of the above mentioned studies vary as time periods, data sets, examined environments and countries differ.…”

“…Pasiouras and Kosmidou (2007), Albertazzi and Gambacorta (2009), Wanzenried (2011, 2014), Rumler and Waschiczek (2012) among others used the annual GDP growth rate to link business cycle and bank earnings. Athanasoglou et al (2008), Apergis (2009) and Kanas et al (2012) used output gat as a measure of business cycle. All authors found strong positive correlation between business cycle and bank profitability.…”