Vol.11, No.3, August 2022.                                                                                                                                                                              ISSN: 2217-8309

                                                                                                                                                                                                                        eISSN: 2217-8333


TEM Journal



Association for Information Communication Technology Education and Science

Profitability Management: How Can Macro and Microeconomic Determinants Influence Commercial Bank Profitability in the EU-27?


Petra Jílková, Jana Kotěšovcová


© 2022 Petra Jílková, published by UIKTEN. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License. (CC BY-NC-ND 4.0)


Citation Information: TEM Journal. Volume 11, Issue 3, Pages 1300-1307, ISSN 2217-8309, DOI: 10.18421/TEM113-39, August 2022.


Received: 01 May 2022.

Revised:   22 July 2022.
Accepted: 28 July 2022.
Published: 29 August 2022.




This paper examines the role of macro and microeconomic determinants in bank profitability in the EU-27. To identify how defined variables can affect profitability, a regression model was constructed with a multicollinearity condition, with multicollinearity below the defined value. Data were collected based on 3,257 bank balance sheets and the World Bank and ORBIS Bank Focus databases. Based on a literature review, we have stated that the bank sector profitability is measured by Net Interest Margin (NIM), Return on Average Assets (ROAA), and Return on Average Equity (ROAE) as dependent variables. The statistical model showed no acceptable solution for Return on Average Equity. Four allowable solutions were found for the profitability of average assets and six solutions for net interest margin. Lastly, the results indicate a clear effect of rising inflation on increasing bank interest rates, and therefore higher interest margins. A healthy economy, also characterized by a growing GDP rate, also positively affects the interest margin.


Keywords – bank profitability, macroeconomic determinants, microeconomic determinants, linear regression analysis, multicollinearity.



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