Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299029 
Year of Publication: 
2022
Citation: 
[Journal:] Journal of Central Banking Theory and Practice [ISSN:] 2336-9205 [Volume:] 11 [Issue:] 1 [Year:] 2022 [Pages:] 5-22
Publisher: 
Sciendo, Warsaw
Abstract: 
This study investigates the relationship between profitability and market power in the banking sector using data from the financial reports of the banks that operated in Serbia and Montenegro, covering the period from the first quarter of 2010 to the last quarter of 2019. In order to investigate this relationship, determinants of bank profitability are split between internal and external. As the external determinants, selected ratios of concentration were calculated and used in order to measure market power. The total of sixteen panel regression models were applied, eight for each country. The results indicate that variations of return on assets and return on equity in Serbia can be explained by the variations of the ratios of concentration. On the other hand, results of the panel regression model applied for the banking sector of Montenegro does not give enough argument to support such explanation, and bank profitability can be explained by bank efficiency to some extent.
Subjects: 
banking sector
bank profitability
market power
competition
JEL: 
G21
E58
L10
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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