Measuring the Impact of the 2007–2009 Financial Crisis on the Performance and Profitability of U.S. Regional Banks

Growe, Glenn; DeBruine, Marinus; Cha, Inkyung

doi:10.1108/s1474-787120150000025005

Cited by 10 publications

(12 citation statements)

References 28 publications

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“…The authors reported the positive impact of a higher capital to assets ratio on the profitability of Greek banks. Lee et al (2015b) applied GMM and found a positive impact of the equity to asset ratio on the Net Interest Margin (NIM) of 418 U.S. regional banks during the pre-crisis period. Berger (1995) also provided empirical evidence of the positive relationship between the capitalization and profitability of U.S. banks.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

A Study on the Impact of Capitalization on the Profitability of Banks in Emerging Markets: A Case of Pakistan

Haris

Tan

Malik³

et al. 2020

JRFM

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A strong capitalized position of financial institutions is essential to ensure their solvency. Because of their unique nature, banks must always keep an optimum level of capital to ensure smooth banking earnings. Consequently, it is mandatory for all types of banks operating in Pakistan to keep a minimum amount of required capital along with capital adequacy to remain solvent and profitable. Therefore, using three measures of capitalization, i.e., the Capital Ratio (CR), Capital Adequacy Ratio (CAR), and Minimum Capital Requirement (MCR), and four measures of profitability, i.e., Return on Avg. Assets (ROAA), Return on Avg. Equity (ROAE), Net Interest Margin (NIMAR), and Profit Margin (NMAR), this study contributes to the existing literature on the relationship between the capitalization and profitability of 29 Pakistani banks over the period of 2007–2018. The results, based on the Generalized Method of Moments (GMM) system estimator technique, reported an inverted U-shaped relationship between the two capitalization measures, i.e., CR and CAR, and the four profitability measures, i.e., ROAA, ROAE, NIMAR, and NMAR. This indicates that profitability increases with an increase in capitalization up to a certain level, while beyond that level, a further increase in capitalization decreases profitability. The results also indicate that banks who maintain their MCR have higher profitability than those who do not.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

A Study on the Impact of Capitalization on the Profitability of Banks in Emerging Markets: A Case of Pakistan

Haris

Tan

Malik³

et al. 2020

JRFM

View full text Add to dashboard Cite

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“…Following them, a large and growing body of literature focused on the determinants of bank profitability, taking also into consideration its importance to bank solvency and the overall banking sector stability (Dietrich and Wanzenried, 2011;Lee and Kim, 2013;Growe et al, 2014;Athanasoglou et al, 2008). Although, a part of the literature on bank profitability determinants examines groups of international banks Wanzenried, 2014 andMizraei et al, 2013), the majority of the studies survey bank profitability in specific areas, such as Lee et al (2015), Growe et al (2014) and Kanas et al (2012) for US banks and Pasiouras and Kosmidou (2007), Staikouras and Wood (2003), Molyneux and Thornton (1992), Goddard et al (2004) and Athanasoglou et al (2006) for European banks. Moreover, some studies have explored the determinants of bank profitability in specific countries, such as Kosmidou et al (2004) in UK, Trujillo-Ponce (2013) in Spain, Tan and Floros (2012) in China.…”

Section: Review Of the Literaturementioning

confidence: 99%

“…Research on bank profitability has mainly focused on two groups of factors as explanatory variables, namely internal and external determinants. Lee et al (2015), Athanasoglou et al (2008) and Staikouras and Wood (2003) define as bank specific determinants of bank profitability those factors that are influenced by the bank's management, whereas Kosmidou (2008) and Staikouras and Wood (2003) define as external environment determinants of bank profitability those external to the bank factors which cannot be influenced by its management. The latter are additionally divided into industry-specific and macroeconomic determinants of bank profitability.…”

Section: Review Of the Literaturementioning

confidence: 99%

“…A considerable number of studies explore the explanatory power of macroeconomic forces on bank profitability (Athanasoglou et al, 2008;Kosmidou, 2008;Lee and Kim, 2013;Bolt et al, 2012;Tan and Floros, 2012;Pasiouras and Kosmidou, 2007;Alexiou and Voyazas, 2009;Jureviciene and Doftartaite, 2013) whereas a large body of literature investigates how industry-specific factors affect bank performance (Bourke, 1989;Mizraei et al, 2013;Athanasoglou et al, 2006;Goddard et al, 2004;Belkhaoui et al, 2014;Pillof and Rhoades, 2002). Finally, the impact of the recent financial crisis on the determinants of bank profitability has been scarcely examined (Dietrich and Wanzenried, 2011;Lee et al, 2015). The next section describes both the dependent and independent variables considered in this paper.…”

Section: Review Of the Literaturementioning

confidence: 99%

“…Furthermore, Athanasoglou et al (2008) aptly argue that a healthy, sound and profitable banking sector is able to contribute to the overall stability and soundness of the economy. In the same spirit, Lee et al (2015) regard bank profitability as a crucial factor in a bank's ability to survive a financial crisis. Moreover, for Dietrich and Wanzenried (2011), bank profitability is an indication of how efficiently and effectively a bank is managed.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Macroeconomic and Industry-Specific Determinants of Greek Bank Profitability

Ζαμπαρα¹,

Giannopoulos²,

Koufopoulos³

2017

IJBESAR

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The purpose of this paper is to investigate the external factors that influence the profitability of a typical Greek systemic bank over the period [2001][2002][2003][2004][2005][2006][2007][2008][2009][2010][2011][2012][2013][2014]. Design/Methodology/Approach: A conceptual framework incorporating two fundamental groups of constructs, namely, macroeconomic forces and industry related factors, was developed. Two constructs were examined in the former: GDP growth rate and unemployment rate, whilst two attributes were explored in the latter; the bank's market share, both in terms of deposits and in terms of assets, and the banking market growth, also both in terms of the market's total assets and total deposits. In order to isolate the effects of the ongoing financial crisis, the research was undertaken for two periods, firstly 2001 to 2014 and secondly, the period 2001-2011, which excluded the deep recession. Consequently, multiple regression analysis was conducted and linear models were specified by means of OLS. Findings:The empirical analysis revealed that both macroeconomic forces and industryrelated factors affect bank profitability. As far as the macroeconomic factors are concerned, unemployment rate has a negative impact, whereas the GDP growth rate has a positive impact on bank profitability. The industry-related factors, rate of growth of the industry's deposits and bank's assets market share have a positive impact on the financial performance of the bank. Finally, the rate of growth of the industry's assets and the bank's deposits market share have a negative effect on bank profitability. Originality/Value: This study reveals the mechanism determining bank profitability over a recent period that includes the financial crisis. Moreover, understanding the impact of macroeconomic forces as well as industry related attributes on bank profitability may enable banks to focus on the most critical factors in their decision process.

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Performance Changes Over Difficult Times for the Banking Sector: A Branch Level Study

Aggelopoulos¹

2017

Advances in Management Accounting

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Measuring the Impact of the 2007–2009 Financial Crisis on the Performance and Profitability of U.S. Regional Banks

Cited by 10 publications

References 28 publications

A Study on the Impact of Capitalization on the Profitability of Banks in Emerging Markets: A Case of Pakistan

A Study on the Impact of Capitalization on the Profitability of Banks in Emerging Markets: A Case of Pakistan

Macroeconomic and Industry-Specific Determinants of Greek Bank Profitability

Performance Changes Over Difficult Times for the Banking Sector: A Branch Level Study

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