WHAT IS THE KEY DRIVER OF BANK STOCK RETURNS? A comparative analysis

This study analyses stock price performances during the past decade and the key drivers of the stock price movements of 228 global banks, which are classified as either GEM (global emerging market) or DM (developed market) banks based on their countries and regions. Our findings suggest that strong pre-provision operating profit growth is more important than profitability as a stock return driver for banks around the world. We also find that despite their similar ROE levels, GEM banks have outperformed DM banks almost every year.