The Effect of Euribor on Banking Profitability: Evidence From the Spanish Banking System

Boto García, David; Álvarez, Antonio; Baños-Pino, José Francisco

Use this link to cite:

http://hdl.handle.net/2183/30166

The Effect of Euribor on Banking Profitability: Evidence From the Spanish Banking System

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7083-10-1-1-z.pdf (530.48 KB)

Identifiers

URI: http://hdl.handle.net/2183/30166

DOI: 10.17979/ejge.2021.10.1.7083

Publication date

2021-06-17

Authors

Boto García, David

Álvarez, Antonio

Baños-Pino, José Francisco

Bibliographic citation

Boto-García, D., Álvarez, A., & Baños Pino, J. F. (2021). The effect of Euribor on banking profitability: evidence from the Spanish banking system. European Journal of Government and Economics, 10(1), 5-29. https://doi.org/10.17979/ejge.2021.10.1.7083

Abstract

[Abstract] This paper studies the relationship between the Euribor rate and the return on average assets (ROAA) of the Spanish banking sector. We use quarterly time series data for the period 1995-2016. Our analysis also controls for bank factors, market concentration, the macroeconomic environment and time effects. The main purpose is to examine how the sector's ROAA varies with the slope of the yield curve. We find evidence of an inverse relationship between the Euribor rate and profitability. We also show that banking profitability is pro-cyclical and is positively related to the stock of performing loans and the national 10-year bond yield.