Euro adoption and bank profitability in Central and Eastern Europe

Zając, Jan and Paczos, Wojtek ORCID: https://orcid.org/0000-0002-8129-0235 2025. Euro adoption and bank profitability in Central and Eastern Europe. Ekonomista 10.52335/ekon/206003

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Abstract

We provide new evidence on the effects of adopting a common European currency on bank profitability in Central and East ern Europe (CEE). We construct a panel of 1033 bank-year observations across 11 countries between 2006 and 2020. Our results suggest that the effect of joining the euro area on bank profitability is not statistically significant over a longer period, but that the euro exerts downward pressure on banks’ profits in a stable economic climate. Additionally, we contribute to the existing literature on determinants of bank profitability in the CEE region and confirm that capitalisation and bank size have a positive influence, while liquidity and the loans-to-assets ratio have a negative influence on profitability.

Item Type:	Article
Date Type:	Published Online
Status:	In Press
Schools:	Schools > Business (Including Economics)
Additional Information:	License information from Publisher: LICENSE 1: URL: https://creativecommons.org/licenses/by/4.0/, Start Date: 2025-08-06
Publisher:	Polskie Towarzystwo Ekonomiczne
ISSN:	0013-3205
Date of First Compliant Deposit:	19 August 2025
Date of Acceptance:	6 June 2025
Last Modified:	19 Aug 2025 10:45
URI:	https://orca.cardiff.ac.uk/id/eprint/180548

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