The dynamics of US bank profitability

Chronopoulos, Dimitris K.; Liu, Hong; McMillan, Fiona Jayne; Wilson, John O. S.

doi:10.1080/1351847x.2013.838184

Cited by 100 publications

(65 citation statements)

References 68 publications

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“…Liquidity is negatively related to profitability for non-oil countries using "total banks" sample. This is in accordance with Chronopoulos et al (2015) who find that higher liquidity is important to secure against liquidity risk. Efficiency is negative and significant in oil countries using total banks sample and is robust which is in line with Mirzaei et al (2013).…”

Section: Resultssupporting

confidence: 80%

Profitability of commercial banks revisited: new evidence from oil and non-oil exporting countries in the MENA region

Abdullah¹,

Tan

2017

Investment Management and Financial Innovations

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This paper investigates the determinants of commercial bank profitability in oil and non-oil countries of the Middle East and North Africa (MENA) region using data from 11 countries over the period [2004][2005][2006][2007][2008][2009][2010][2011][2012][2013][2014]. Since banks are under no obligation to fill reports to Bankscope database, irregular reporting banks are omitted from the sample and the model is re-estimated using only regular reporting banks, and a comparative analysis between total banks' sample and regular reporting banks' sample is provided. Using the two-step system GMM and fixed effects models, the results indicate that credit risk is negative and highly significant when irregular reporting banks are omitted from the sample, particularly in the non

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Section: Resultssupporting

confidence: 80%

Profitability of commercial banks revisited: new evidence from oil and non-oil exporting countries in the MENA region

Abdullah¹,

Tan

2017

Investment Management and Financial Innovations

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“…Chronopoulos et al. (), focusing solely on the US case, extended the period of study (looking at 1984–2010) and considered patterns of profit persistence specifically in relation to significant acts of regulation or deregulation. US bank profits, they found, were highly persistent between 1984 and 1994; became somewhat less persistent after the passage in the latter year of the Riegle‐Neal Interstate Banking and Branching Efficiency Act, which removed restrictions on interstate branch banking; and increased in persistency once again after 1999, which saw the repeal of the famous Glass‐Steagall Act and its ring‐fencing of commercial from investment banking.…”

Section: Financialisation As Profit(ability)mentioning

confidence: 99%

Financialisation as Monopoly Profit: The Case of US Banking

Christophers

2018

Antipode

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Different economic measures afford different ways of seeing processes of financialisation. In the prototypical case of the US economy, the most compelling evidence of post‐1970s financialisation is found in corporate profits measures. This much has been clear for at least a decade. What remains much less clear, however, is the explanation for the long‐term maintenance and amplification of extreme financial‐sector profitability that financialisation in the United States has and continues to entail. With a specific focus on banking, this article turns to post‐Marxian scholarship on profit rate trends to explain this phenomenon. It argues that limited and declining levels of competition within the US banking sector during recent decades—rooted in high levels of industry concentration, collusive behaviour, and substantial entry barriers—have contributed to sustaining and boosting abnormal sectoral profitability. In doing so, the article theorises financialisation in the United States explicitly in terms of monopoly profit.

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“…Loanimpch_loans: Loan impairment charges to average gross loans are part of the overall cost of lending activity; in this sense they have a negative impact on bank profitability (Chronopoulos et al, 2015) as measured by ROAA and ROAE. This is not likely to occur for NIM that can instead benefit from a riskier portfolio.…”

Section: Methodsmentioning

confidence: 99%

“…Competitive dynamics, continuously changing regulation, introduction of new accounting standards have contributed in subsequent years to make challenging the research activity, giving birth to different streams of literature. From a geographical point of view, we can divide works based on a cross-country comparison (Molyneux & Thornton, 1992;Demirguc-Kunt & Huizinga, 1999;Goddard, Molyneux, & Wilson, 2004a;Athanasoglou, Delis, & Staikouras, 2006;Pasiouras & Kosmidou, 2007;Goddard, Liu, Molyneux, & Wilson, 2011;Dietrich & Wanzenried, 2014;ElKelish & Tucker, 2015;Weigand, 2015) from others that focuses on a single country (Athanasoglou, Brissimis, & Delis, 2008;Alexious & Sofoklis, 2009;Alper & Anbar, 2011;Dietrich & Wanzenried, 2011;Trujillo-Ponce, 2013;Lusignani & Onado, 2014;Brighi & Venturelli, 2014;Chronopoulos, Liu, McMillan, & Wilson, 2015).…”

Section: Introduction and Brief Literature Reviewmentioning

confidence: 99%

Determinants of Bank Profitability in the Euro Area: What Has Changed During the Recent Financial Crisis?

Rossi¹,

Borroni²,

Lippi³

et al. 2018

IBR

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During the recent financial crisis, bank profitability has become an element of strong concern for regulators and policymakers; in fact both self-financing strategies and capital increases -necessary to provide higher level of capitalization -rely on the ability of a bank to generate profits. However, the determinants of bank profitability, that seemed to be unequivocally identified by previous literature, appear to have changed under the effect of regulatory and competitive dynamics. We test this hypothesis on commercial, cooperative and saving banks, employing a random effect panel regression on a dataset comprising bank-level data and macroeconomic information (covering the period 2006-2013) for 9 countries of the Euro area. Our findings suggest that, after a period of "irrational exuberance" in which credit growth and high leverage were seen as proper and fast ways to boost profitability, a sound financial structure and a wiser and objective credit portfolio management have become the main drivers to ensure higher returns.

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The dynamics of US bank profitability

Cited by 100 publications

References 68 publications

Profitability of commercial banks revisited: new evidence from oil and non-oil exporting countries in the MENA region

Profitability of commercial banks revisited: new evidence from oil and non-oil exporting countries in the MENA region

Financialisation as Monopoly Profit: The Case of US Banking

Determinants of Bank Profitability in the Euro Area: What Has Changed During the Recent Financial Crisis?

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