Impacts of COVID-19 on the banking sector between 2016 and 2024
Published:
Dec 29, 2025
Volume:
23
Keywords:
RAROC
DuPont decomposition
COVID-19
Brazilian banking sector
Abstract
This article analyzes the impact of the COVID-19 pandemic on the Risk-Adjusted Return on Capital (RAROC) of Brazilian banks listed on the B3 exchange (2016-2024), investigating structural transformations in profitability drivers and asymmetries between public and private institutions. The Risk-Adjusted DuPont decomposition methodology was employed to isolate the effects of Asset Turnover, Profit Margin, and Leverage. The econometric analysis utilized panel data regressions with clustered standard errors and robust inference via Wild Cluster Bootstrap to address sample heterogeneity. The pandemic represented an inflection point in the generation of banking results. A structural shift was identified in the post-crisis period, characterized by a reduction in Profit Margin compensated by an increase in Leverage and Asset Turnover. Furthermore, it was found that state-owned banks, after an initial deterioration, presented a robust recovery, eliminating the statistical significance of the performance difference relative to private banks in the recovery period.
How to cite
Marlon Bruno Salazar. Impacts of COVID-19 on the banking sector between 2016 and 2024. Brazilian Review of Finance, v. 23, n. 1, 2025. p. e202520. DOI: 10.12660/rbfin.v23n1.2025.97070.
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