Determinants of Bank Profitability: Evidence from the US, 2010-2016

This paper examines how bank-specific variables and macroeconomic variablesaffect the profitability of US commercial banks over the period 2010-2016.Taking return on assets (ROA) and return on equity (ROE) as measures ofprofitability, we estimate regressions using Ordinary Least Squares (OLS). Wefind that capital ratio, loans, deposits, noninterest income, and unemploymentrate affect bank profitability. When we divide banks into several size groups,we find that size affects the profitability of small banks.