GDP growth only raises profits for some banks – Bank of Italy paper


GDP growth in the European Union may only raise the profits of banks that have comparatively large loan portfolios, a working paper published by the Bank of Italy finds.

In Bank profitability and macroeconomic conditions: are business models different?, Emilia Bonaccorsi di Patti and Francesco Palazzo look at data on 221 EU banks from 2006 to 2016. The total assets held by the surveyed banks amount to 87% of the EU banking sector’s assets.

The authors separate the banks into three clusters,

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