An Empirical Investigation of Australian Bank Stability and Profitability

The Australian banking sector has withstood negative shocks for the past 29 years and the sector remains one of the most profitable banking sectors in the world. This study examines the major factors that influenced Australian banks’ stability and profitability for the period 1991-2019. We used comprehensive bank-specific, industry-specific and macroeconomic factors to investigate bank stability and profitability and compared the differences in determinants of the big four and other big banks. The findings from this study will help to design better policy measures for improving the stability and performance of the Australian banking industry.