Social capital and banking system profitability: A survey of European Union countries
Over the last years, the concept of social capital as a facilitator of economic activities has been a remarkable issue among economists. In this article, we study the impact of social capital on banking performance focusing on profitability in the European Union for period 2008-2016. Social capital...
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| Format: | Article |
| Language: | English |
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University of A Coruna
2019-06-01
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| Series: | European Journal of Government and Economics |
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| Online Access: | http://revistas.udc.es/index.php/ejge/article/view/4575 |
| _version_ | 1830208863224201216 |
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| author | Arash Nayebyazdi |
| author_facet | Arash Nayebyazdi |
| author_sort | Arash Nayebyazdi |
| collection | DOAJ |
| description | Over the last years, the concept of social capital as a facilitator of economic activities has been a remarkable issue among economists. In this article, we study the impact of social capital on banking performance focusing on profitability in the European Union for period 2008-2016. Social capital indicators are applied in the model are "trust in others" and "fair behavior of others". We expect more profitable banks in societies with higher levels of social capital. According to the type of data, we apply GMM estimator to do more efficient estimations. We use auxiliary variables such as bank asset, capital adequacy, real interest rate, the cost to income ratio as micro variables, GDP and inflation are employed as macros. Our estimations point at a rejection of the main hypothesis. Opportunistic behavior and less social trust result in more profits for European countries. We justify the results in two ways. First, due to the 2008 financial crisis, trust in all institutions has decreased in European countries. The second reason concerns countries with low levels of social capital. The decrease of trust for the banking system is lower than for other institutions. Therefore, that sector may benefit is such circumstances. |
| first_indexed | 2024-12-18T04:56:50Z |
| format | Article |
| id | doaj.art-acd234496b794fb0bbbf85ee9362f425 |
| institution | Directory Open Access Journal |
| issn | 2254-7088 |
| language | English |
| last_indexed | 2024-12-18T04:56:50Z |
| publishDate | 2019-06-01 |
| publisher | University of A Coruna |
| record_format | Article |
| series | European Journal of Government and Economics |
| spelling | doaj.art-acd234496b794fb0bbbf85ee9362f4252022-12-21T21:20:15ZengUniversity of A CorunaEuropean Journal of Government and Economics2254-70882019-06-018110.17979/ejge.2019.8.1.4575Social capital and banking system profitability: A survey of European Union countriesArash Nayebyazdi0Mofid University, IranOver the last years, the concept of social capital as a facilitator of economic activities has been a remarkable issue among economists. In this article, we study the impact of social capital on banking performance focusing on profitability in the European Union for period 2008-2016. Social capital indicators are applied in the model are "trust in others" and "fair behavior of others". We expect more profitable banks in societies with higher levels of social capital. According to the type of data, we apply GMM estimator to do more efficient estimations. We use auxiliary variables such as bank asset, capital adequacy, real interest rate, the cost to income ratio as micro variables, GDP and inflation are employed as macros. Our estimations point at a rejection of the main hypothesis. Opportunistic behavior and less social trust result in more profits for European countries. We justify the results in two ways. First, due to the 2008 financial crisis, trust in all institutions has decreased in European countries. The second reason concerns countries with low levels of social capital. The decrease of trust for the banking system is lower than for other institutions. Therefore, that sector may benefit is such circumstances.http://revistas.udc.es/index.php/ejge/article/view/4575social capitalEuropean Unionbanking profitabilitygeneralized method of moments |
| spellingShingle | Arash Nayebyazdi Social capital and banking system profitability: A survey of European Union countries European Journal of Government and Economics social capital European Union banking profitability generalized method of moments |
| title | Social capital and banking system profitability: A survey of European Union countries |
| title_full | Social capital and banking system profitability: A survey of European Union countries |
| title_fullStr | Social capital and banking system profitability: A survey of European Union countries |
| title_full_unstemmed | Social capital and banking system profitability: A survey of European Union countries |
| title_short | Social capital and banking system profitability: A survey of European Union countries |
| title_sort | social capital and banking system profitability a survey of european union countries |
| topic | social capital European Union banking profitability generalized method of moments |
| url | http://revistas.udc.es/index.php/ejge/article/view/4575 |
| work_keys_str_mv | AT arashnayebyazdi socialcapitalandbankingsystemprofitabilityasurveyofeuropeanunioncountries |