Cost efficiency and bank profitability

Banking financial institutions play a fundamental role in the functioning of economic systems, especially for their financial intermediation function. In the 1990s, major changes occurred in the Brazilian banking industry, such as the opening to greater participation of foreign banks, the growth of internationalization and the intensification of mergers and acquisitions. This sector showed strong growth, increasing its relevance in the national and international economic scenario. The efficiency of banking financial institutions becomes increasingly important, since the structure of the banking business has been subject to changes around the world. Many countries that have implemented new regulatory policies in the sector are experiencing a scenario with more competitive institutions. Given the importance of banking institutions for the economy of countries, the profitability of these institutions has always been the subject of many discussions in the financial market, because good banking performance can be associated with good economic performance.