Study regarding the influence of the endogenous and exogenous factors on credit institution’s return on assets

• Main Authors: Maria-Daciana RODEAN (COZMA), Nicolae BALTEŞ
• Format: Article
• Language: English
• Published: General Association of Economists from Romania 2016-03-01
• Series: Theoretical and Applied Economics
• Subjects: ROA; endogenous and exogenous factors; profitability; write-off processes; regression equation
• Online Access: http://store.ectap.ro/articole/1175.pdf

The goal of each credit institution is represented by profitability, an objective hardly to be achieved, taking into account that banks are practicing their usual activities within a banking system that hardly tries to recover. The main purpose of this research is to identify the existence of a dependency relationship between return on assets and endogenous factors (growth rate of the loan portfolios; the rate of growth of the provisions and solvency ratio) and the exogenous ones (GDP and inflation rate). The analysis done over the horizon of the last 10 years, a period that includes both economic boom, recession and recovery, illustrated the vulnerability of the credit institution in front of the business environment. The study demonstrated a significant dependence relationship, between return on assets recorded by Carpatica Commercial Bank and the intern determinants, while the variation of the exogenous factors does not explain the variation of ROA recorded by the bank.