engleski

Financial Structure and the Profitability of Croatian Banks: Modelling and Forecasting

conditions influences their profitability. Goal of the paper is to detect to what extents specific characteristics of the bank and macroeconomic conditions influence bank’ s profitability. Results of the analysis indicated that in short run and stable macroeconomic conditions higher profitability is accomplished by the well-capitalized banks with larger market share, which are also efficient in managing their operating costs and are able to pass “ non-interest” assets costs to their clients. Several forecasting methods are used to predict bank’ s profitability, and CR&T decision tree was the most efficient one with the lowest forecasting errors. Because of its simplicity CR&T decision tree could be used for “ what-if” analysis in order to examine influence of different bank characteristics to its profitability.

financial structure; bank profits; forecasting; regression analysis; decision tree; neural networks

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