International Journal of Business and Economic Sciences Applied Research (Aug 2015)

A model for predicting Inactivity in the European Banking Sector

  • Themistokles Lazarides

Journal volume & issue
Vol. 8, no. 1
pp. 137 – 154

Abstract

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Purpose – The paper will addresses the issue of inactivity and will try to detect its causes using econometric models. The Banking sector of Europe has been under transformation or restructuring for almost half a century. Design/methodology/approach – Probit models and descriptive statistics have been used to create a system that predicts inactivity. The data was collected from Bankscope. Findings – The results of the econometric models show that from the six groups of indicators, four have been found to be statistically important (performance, size, ownership, corporate governance). These findings are consistent with the theory. Research limitations/implications – The limitation is that Bankscope does not provide any longitudinal data regarding ownership, management structure and there are some many missing values before 2007 for some of the financial ratios and data. Originality/value – The paper's value and innovation is that it has given a systemic approach to find indicators of inactivity.

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