We study the factors driving the differences in profitability of
large commercial banks in the United States and in EU and
non-EU countries from 2004-2014. Most relevant bank-specific
and macroeconomic variables are reviewed and selected from
the literature. Pooled sample estimation and panel data tests
are conducted associating these factors with Return on Equity.
Our main findings are: macroeconomic factors have more
impact on U. S. banks’ profitability, while size and GDP growth
significantly impact foreign banks’ profitability. In comparing U.
S. and EU banks, we find significant differences in the
explanatory power of size, cash adequacy and real interest rate.
The significance and contribution of this study are from the
advancement of knowledge in the frontier of banking industry
performance research and from the innovative direct
comparison between U. S. and EU banks.
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