Financial Structure and the Profitability of Croatian Banks: Modelling and Forecasting

摘要

Banks can be differed considering their size, cost and revenue structure, which together with macroeconomic conditions influences their profitability. Goal of the paper is to detect to what extents specific characteristics of the bank and macroeconomic conditions influence bank's profitability. Results of the analysis indicated that in short run and stable macroeconomic conditions higher profitability is accomplished by the well-capitalized banks with larger market share, which are also efficient in managing their operating costs and are able to pass "non-interest" assets costs to their clients. Several forecasting methods are used to predict bank's profitability, and CR&T decision tree was the most efficient one with the lowest forecasting errors. Because of its simplicity CR&T decision tree could be used for "what-if" analysis in order to examine influence of different bank characteristics to its profitability.