Forecasting banks return on equity using leading economic indicators
The research examines an approach to forecast return on equity using leading economic indicators for short periods in banks. ROE is one of the most important ratios for performance measurement. Its adequacy is necessary for competitiveness, attract funding in financial markets, accumulate reserve f...
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Vilnius Gediminas Technical University
2020-06-01
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doaj-d1a67aa251204d37b485bb8b87e5fe7c2020-11-25T02:41:33ZengVilnius Gediminas Technical UniversityBusiness: Theory and Practice1648-06271822-42022020-06-0121210.3846/btp.2020.12664Forecasting banks return on equity using leading economic indicatorsDaiva Jurevičienė0Darius Rauličkis1Economics Engineering Department Faculty of Business Management, Vilnius Gediminas Technical University, Vilnius, LithuaniaFaculty of Economics and Business, Mykolas Romeris University, Vilnius, Lithuania The research examines an approach to forecast return on equity using leading economic indicators for short periods in banks. ROE is one of the most important ratios for performance measurement. Its adequacy is necessary for competitiveness, attract funding in financial markets, accumulate reserve for future turbulences, secure compliance with supervisory requirements and maintain positive signals for the market. There is still a debate in the literature on factors of commercial banks’ profitability forecasting, techniques, and most appropriate models to improve the correctness of predicting and acquiring more accurate signals for communication on targets. The problems are still relevant from both a theoretical perspective and practical implementation. This research aims to prove the necessity to include leading economic indicators for short term ROE forecasting. It conducts investigations for the relevant studies, using regression analysis, necessary tests, ascertains opportunities and limitations of using these indicators and develops a conceptual model and its assessment major Baltic banks. The results show verification of approach to forecast ROE using leading economic indicators for short periods. Such study complements signalling theory with a new approach, how to predict and acquire signal not only using economic indicators as a general group but sub-group them into coinciding, lagging and leading. https://www.tede.vgtu.lt/index.php/BTP/article/view/12664return on equityfinancial ratioseconomic indicatorsleading economic indicatorsforecastingbanks |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Daiva Jurevičienė Darius Rauličkis |
spellingShingle |
Daiva Jurevičienė Darius Rauličkis Forecasting banks return on equity using leading economic indicators Business: Theory and Practice return on equity financial ratios economic indicators leading economic indicators forecasting banks |
author_facet |
Daiva Jurevičienė Darius Rauličkis |
author_sort |
Daiva Jurevičienė |
title |
Forecasting banks return on equity using leading economic indicators |
title_short |
Forecasting banks return on equity using leading economic indicators |
title_full |
Forecasting banks return on equity using leading economic indicators |
title_fullStr |
Forecasting banks return on equity using leading economic indicators |
title_full_unstemmed |
Forecasting banks return on equity using leading economic indicators |
title_sort |
forecasting banks return on equity using leading economic indicators |
publisher |
Vilnius Gediminas Technical University |
series |
Business: Theory and Practice |
issn |
1648-0627 1822-4202 |
publishDate |
2020-06-01 |
description |
The research examines an approach to forecast return on equity using leading economic indicators for short periods in banks. ROE is one of the most important ratios for performance measurement. Its adequacy is necessary for competitiveness, attract funding in financial markets, accumulate reserve for future turbulences, secure compliance with supervisory requirements and maintain positive signals for the market. There is still a debate in the literature on factors of commercial banks’ profitability forecasting, techniques, and most appropriate models to improve the correctness of predicting and acquiring more accurate signals for communication on targets. The problems are still relevant from both a theoretical perspective and practical implementation. This research aims to prove the necessity to include leading economic indicators for short term ROE forecasting. It conducts investigations for the relevant studies, using regression analysis, necessary tests, ascertains opportunities and limitations of using these indicators and develops a conceptual model and its assessment major Baltic banks. The results show verification of approach to forecast ROE using leading economic indicators for short periods. Such study complements signalling theory with a new approach, how to predict and acquire signal not only using economic indicators as a general group but sub-group them into coinciding, lagging and leading.
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topic |
return on equity financial ratios economic indicators leading economic indicators forecasting banks |
url |
https://www.tede.vgtu.lt/index.php/BTP/article/view/12664 |
work_keys_str_mv |
AT daivajureviciene forecastingbanksreturnonequityusingleadingeconomicindicators AT dariusraulickis forecastingbanksreturnonequityusingleadingeconomicindicators |
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