The dynamics of US bank profitability

Dimitris K. Chronopoulos, Hong Liu, Fiona J. McMillan, John O. S. Wilson (Lead / Corresponding author)

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    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 pages19
    JournalEuropean Journal of Finance
    Volume21
    Issue number5
    Early online date26 Sep 2013
    DOIs
    Publication statusPublished - 2015

    Keywords

    • banking
    • crisis
    • deregulation
    • persistence
    • profitability
    • regulation

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    Chronopoulos, D. K., Liu, H., McMillan, F. J., & Wilson, J. O. S. (2015). The dynamics of US bank profitability. European Journal of Finance, 21(5), 426-443. https://doi.org/10.1080/1351847X.2013.838184