PROFITABILITY OF THE BANKS IN THE REPUBLIC OF NORTH MACEDONIA - PANEL ANALYSIS FOR THE 2010-2019 PERIOD

Abstract

The purpose of this paper is to examine some of the significant factors that affect the profitability of the banks in the Macedonian banking industry. The profitability is shown through the ROA indicator. The analysis uses a model of multiple regression with a data panel that includes 14 banks in the Republic of North Macedonia for the period 2010 to 2019.   The analysis shows that operating efficiency is a variable with a significant impact on profitability. The size of the bank cannot be argued to be a significant factor in the profitability of banks, but the share of loans in total assets shows a positive impact on profits. On the other hand, the share of deposits and the share of interest income in total income, they both have a weaker impact on profitability.   The results of the research can help to determine the most important factors for success (or failure) of the banking industry. Also, they could help making sound decisions of bank management in the future, especially in terms of improving banks profitability. &nbsp