Bank stability in the Eurozone: a comprehensive analysis of key determinants (2006–2021)

Purpose Banks are the primary financial institutions that play a crucial role in the financial system, as their stability is essential for a sustained economy. Therefore, this research article aimed to unveil the determinants of bank stability in the Eurozone countries for 2006–2021. Design/methodology/approach Most of the data used in this analysis (i.e. the dependent and independent variables) were obtained from a single credible international source, the Global Economy database. We considered several regression models in this study and concluded that the Hausman–Taylor estimation model was the most appropriate for the data in question. Findings Overall, the research reliably reported nine independent variables (out of eleven included in the regression analysis equation) that were found to be essential for bank stability, as prescribed by the banking system z-scores. Of course, the Hausman–Taylor model was not a biased choice but a scientifically justifiable one. Research limitations/implications The analysis is limited by data availability and the chosen econometric model, which may affect the generalizability of the findings. Future research should consider a broader set of variables and alternative modeling approaches. Originality/value This research provides a novel integration of macroeconomic and bank-specific factors in analyzing bank stability, offering valuable insights for policymakers and regulators in the Eurozone.