Journal Article

The impact of corruption, economic freedom, regulation and transparency on bank profitability and bank stability: Evidence from the Eurozone area

Abstract

This paper examines the impact of corruption, economic freedom, bank regulation and transparency on bank profitability and bank stability using a sample of 326 banks from the 19 Eurozone countries over the period 2005-2018. We use a balanced panel data set and the Arellano-Bond Generalized Method of Moments dynamic panel estimation procedure. We find that corruption and transparency have a negative effect on bank profitability and bank stability. By contrast, greater economic freedom boosts profitability and banking stability. Our results show that regulation is positively related to bank profitability and its precise effects on stability depend upon the nature of the regulation. We additionally examine how our results are affected by Governance issues and the addition of 5 other European countries from outside the Eurozone. Our overall results indicate that the impact of the variables of interest is sensitive to the precise measures chosen to calculate profitability and financial stability.

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Authors

Asteriou, Dimitrios
Pilbeam, Keith
Tomuleasa, Iuliana

Oxford Brookes departments

Oxford School of Hospitality Management

Dates

Year of publication: 2021
Date of RADAR deposit: 2020-09-04

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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License

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Related resources

This RADAR resource is the Accepted Manuscript of The impact of corruption, economic freedom, regulation and transparency on bank profitability and bank stability: Evidence from the Eurozone area