Country Creditor Rights, Information Sharing and Commercial Banks� Profitability Persistence across the world
ISSN: 1988-8767
Year of publication: 2007
Issue: 314
Type: Working paper
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Abstract
We analyze the persistence of commercial banks� profitability (Return on Equity, ROE) in different levels of creditor rights and an aggregate score of information sharing in terms of credit bureaus. After controlling for bank size and some macroeconomic variables, the results indicate that permanent profitability tend to disappear while profitability persistence is higher when creditors are well protected. Furthermore, the presence of a credit bureau (public or private) increases the persistence of ROE, but higher levels of information sharing foster competition and erode future profitability.