Bank Profitability and Bank Competition: Review of Literature and Directions of Future Research

Abstract

As one of the most important performance indicators, the profitability in the banking industry has been attracted great attention from government, financial regulatory authorities, bank practitioners as well as academic researchers. Because of the improvement in the internet technology together with the innovation in the banking sector, the competitive condition has been increasing during recent decades. The current study comprehensively reviews relevant literature investigating the profitability in the banking sector. In addition, empirical studies examining the competitive conditions in the banking industry have been reviewed. The current paper reviews the empirical research evaluating the inter-relationships between profitability and competition in the banking industry. The current study has a specific focus on these issues in the Chinese banking industry by providing areas of future research in the Chinese banking industry in the conclusion.