Heterogeneous funding patterns and income structure of Croatian banks: panel data evidence

Dependence of the bank income statement indicators on its capital structure is in the focus of this paper. The dynamic panel data analysis encompasses 28 commercial banks from the Republic of Croatia in a pre-recession period i.e. 2003-2008 with a goal of estimating whether heterogeneity of capital structures among banks in Croatia explains differences seen in their profitability. In comparison to the existing empirical background on the capital structure and bank financial performance nexus, the novelty of this research is in the operating margin which is being defined as a dependent variable, among the other usually employed proxies of the bank profitability.