Asset Structure of Commercial Banks and Its Impact on Profit Levels

Abstract

After the Great recession of years 2008 and 2009 the sector of commercial banks started its transformation. It had to adapt to new macroeconomic conditions such as low interest rates or higher level of regulation. Profits of these institutions being influenced by these conditions, the situation led to re-evaluation of accumulated financial assets allocation owned by these institutions during period. The aim of this article is to monitor financial assets owned by commercial banks and to identify the most important portfolio components which have impact on their profit. Linear regression models with mixed effects were created for this analysis. Data from financial statements were collected for period from year 2009 to 2014 for 19 commercial and saving banks for the purpose of this research. Results will contribute to better understanding of asset structure of commercial bank sector after the financial crisis. It will also identify and stress the importance of certain portfolio components. Therefore this paper will contribute to the improvement of legislative governance of financial institutions and avoidance of another financial crisis outbreak in this sector.