Purpose: The paper aims to determine the impact of bank-specific, industry-specific and macro-specific determinants on the profitability indicators – return on assets (ROA) and ratio net-interest margin (RNIM).Design/methodology/approach: This research sample includes selected Croatian banks, and the empirical analysis covers the period 2007-2014. Based on the reliable and robust econometric tests, dynamic estimation technique (DOLS) was run to estimate the profitability models, by using of ROA and RNIM as dependent variables, which also include lagged dependent variables to capture the speed of mean reversion in terms of profitability, respectively.Findings: The results proved the crucial positive impact of assets size (economies of scale), loan portfolio and GDP growth on the banks’ profitability. Further, the negative impacts on profitability have risks and administrative costs. This paper shows the positive impact of capital adequacy ratio (CAR) and leverage on ROA and RNIM, as well as the correlation between market concentration and banks’ profitability.Practical implications: Basically, Croatian banks should improve operative efficiency and risk management practice to increase their profitability. In addition, banks should carefully balance between capital base and risk exposure on the one hand and take advantage of using relative cheaper deposits and borrowed funds instead of using more expensive equity. This conclusion is reasonable, keeping in mind that the Croatian financial market does not punish banks for an extra risk exposure caused by market imperfections. Finally, the regulatory authority in Croatia should impose some additional antitrust measures to increase competition in the banking market.Originality/value: Although a bunch of existing studies explain the determinants of bank profitability from different perspectives, this paper conducts a specific empirical analysis about the determinants of bank profitability in Croatia. In addition, this paper provides a good synthesis of the relevant empirical and theoretical studies from this domain.

This paper deals with energy efficiency examined through an integrated model that links energy with environment, technology, and urbanisation as related areas. Our main goal is to discover how efficiently developed countries use primary energy and electricity (secondary energy). We additionally want to find out how the inclusion of environmental care and renewable energy capacity affects efficiency. For that purpose, we set up an output-oriented BCC data envelopment analysis that employs a set of input variables with non-negative values to calculate the efficiency scores on minimising energy use and losses as well as environmental emissions for a sample of 30 OECD member states during the period from 2001 to 2018. We develop a couple of baseline models in which we find that countries have mean inefficiency margins of 16.1% for primary energy and from 10.8 to 13.5% for electricity. The results from the extended models show that taking care about environment does not affect efficiency in general, while the reliance on energy produced from renewable sources does slightly reduce it.

Many organizations around the world currently are facing board diversity issues and challenges. Hence, this empirical paper investigates the relationship between board diversity and firm’s financial performance. We use a sample of 35 companies from five countries in Southeast Europe (Macedonia, Croatia, Serbia, Bosnia and Herzegovina, and Greece) for the period between 2008 and 2012 to find that, on average, companies with well-educated board members are more profitable and overvalued on the market. When running the regression again to test the levels of heterogeneity, we also find that the companies with more women on board tend to be overvalued on the market, while those with more foreigners on board are subject of undervaluation. The paper mostly contributes to the literature on corporate governance and board diversity. First, we postulate the impact of each of the board diversity variables on the financial performance and then show the extent of this impact and its economic interpretation. Our findings have important practitioners’ implications for corporate regulators and policy-makers since the demonstrated positive impact of the well-educated board members on firm’s financial performance gives a new impetus in building a corporate strategy that will intend to engage more people holding PhD on board.

Wydawnictwo Naukowe Uniwersytetu Szczecińskiego

In this paper, the authors investigate the effects of foreign capital entry on bank performance in the Republic of Macedonia for the 2004-2012 period. They develop a theoretical model of foreign bank and foreign capital entry, followed by an empirical model in which they use the return on average assets (ROAA), the net-interest margin (NIM), and the overhead ratio as dependent variables, and the foreign capital factors combined with other control variables on the side of independent variables. The estimation results from the panel regression analysis and indicates to a positive effect the return on average assets (ROAA) and the negative implications of the net-interest margin (NIM) and the overhead ratio.