The Dynamics of US Bank Profitability

Frank Hong Liu, John Wilson, D Chronopoulos, F McMillan

Research output: Contribution to journalArticle

41 Citations (Scopus)

Abstract

We examine the determinants of profitability for a large sample of US banks over the period 1984–2010. Specifically, we assess the extent to which short-run profits persist, and whether such persistence is affected by changes in regulation and the recent financial crisis. Our findings suggest that the competitive process reduces positions of abnormal profitability, albeit this is not immediate. There is also evidence that changes in regulation enacted during the 1990s affected both the level and persistence of bank profitability. The financial crisis of 2007–2010 appears to have resulted in an increase in the persistence of bank profitability.
Original languageEnglish
Pages (from-to)426-443
Number of pages18
JournalEuropean Journal of Finance
Volume21
Issue number5
Early online date26 Sep 2013
DOIs
Publication statusPublished - 2015

Keywords

  • banking
  • crisis
  • dreregulation
  • profitability
  • persistence
  • regulation

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    Liu, F. H., Wilson, J., Chronopoulos, D., & McMillan, F. (2015). The Dynamics of US Bank Profitability. European Journal of Finance, 21(5), 426-443. https://doi.org/10.1080/1351847X.2013.838184