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About this book

This Palgrave Pivot provides a comprehensive overview of the dynamics that are affecting the profitability of European banks since the recent crisis period. More specifically, it sheds light on the most crucial changes in profit generation and on the consequential changes in banking strategies due to fiercer competition, reduced margin and changing regulation. The work is divided in four main parts. The first section introduces the changes in bank management policies, considering the periods before and since the crisis. In the second section, the authors review the literature on bank profitability and outline the main determinants of profit generation, and in the third section they provide a cross-country analysis of profitability for a wide sample of European banks during the great financial crisis. In the last section, the authors discuss the results of the quantitative analysis under the new regulatory and competitive framework that is progressively affecting the banking sector (fintech, Basel regulations, etc.). This book will be of interest to academics, researchers and students of European banking.

Table of Contents

Frontmatter

Chapter 1. Bank Management After the Great Crisis

Abstract
This chapter provides an overview of the changes in the technological, competitive, regulatory and macroeconomic context that affected the banking sector over the years of the great international financial crisis. In particular, the dynamics linked to the entry into the market of new (and innovative) competitors, the opportunities deriving from the reshaping of the business model and the delicate balance between efficiency and competitiveness on the market are considered; the topic of the new rules affecting the banking sector in Europe is also critically examined.
Mariarosa Borroni, Simone Rossi

Chapter 2. Bank Profitability: Measures and Determinants

Abstract
This chapter deals with the choice of effective bank profitability measures, examining the strengths and weaknesses of the most widespread indices adopted in the literature and among practitioners. In particular, the main profitability and risk-adjusted return metrics are analyzed, comparing the different methodologies with which they can be calculated. In addition, a critical view of the ways in which they can be used in quantitative analysis is provided. Finally, the chapter contains an extensive review of the literature on the subject of determinants of bank profitability.
Mariarosa Borroni, Simone Rossi

Chapter 3. Profitability of European Banks: A Quantitative Analysis

Abstract
This chapter provides an analysis of profitability for a large sample of European banks since the onset of the recent severe international financial crisis. The asymmetries that continue to characterize the various European countries and the differences between the banks operating in them are highlighted. In particular, the analysis focuses on the determinants of bank profitability in Europe and aims to identify the drivers that support the production of positive and stable returns. The aim of the chapter is to identify some behaviors that can be considered as more virtuous, thus determining possible best practices that could serve as an example and guide for the banking sector.
Mariarosa Borroni, Simone Rossi

Chapter 4. Making Profits in the New Competitive and Regulatory Framework

Abstract
This chapter aims to identify the main guidelines by which the new competitive, regulatory and macroeconomic context can be translated into managerial behaviors capable of generating a sustainable level of profitability for the bank. The competitive pressure deriving from new entrants into the market, the macroeconomic environment characterized by lower growth and lower interest rates, the choice of the business model and the composition of a bank’s assets are, in fact, strategic choices on which that bank’s life depends. The chapter provides managerial ‘instructions’ in each of these areas of interest, starting from the data provided by the market examined in the previous parts of the book.
Mariarosa Borroni, Simone Rossi

Backmatter

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