engleski

Regression and decision tree analysis of profitability of Croatian banks

Profitability of banks is influenced by many factors like size, costs structure, income structure, and macroeconomic conditions. Profitability is measured net interest margin. Regression analysis of profitability of Croatian banks is conducted with the goal to investigate to what extents different banks'characteristics and macroeconomic conditions influence profitability of Croatian banks. Unconventional methods like decision trees could also be used in order to estimate the factors of banks' profitability. CR&T decision tree method was applied in order to compare the results of the econometric analysis. Both methods implicated that in short term with stable macroeconomic conditions better profitability is accomplished by well-capitalized banks with bigger market share that are also very efficient in operating costs management. These banks are also very successful in transferring costs of non-income assets to their clients.

regression analysis; banks’ profitability; forecasting; regression analysis; decision trees

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