The persistence of profits in banking: an international comparison

Gugler, Klaus and Peev, Evgeni (2018) The persistence of profits in banking: an international comparison. Applied Economics, 50 (55). pp. 5996-6009. ISSN 0003-6846

Available under License Creative Commons: Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0).

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This article examines the dynamics of bank profitability in the USA, Germany, Great Britain, France, Italy and Switzerland over the period 1993-2014. We find long-run bank profit persistence in all six countries in the period before the financial crisis in 2008. Banks with large capital ratios are persistently more profitable, and there is little evidence of a link between bank size and the persistence of bank profits. Commercial (saving) banks are persistently more (less) profitable in four of the six countries. The effects of the financial crisis in 2008 differed dramatically across countries as well as across ownership types. While US banks experienced dramatic declines in the immediate aftermath of the crisis, they recovered much faster than their European counterparts and essentially retain their long run profit potential by the year 2014.

Item Type: Article
Additional Information: This article was supported by the Jean Monnet Network action of the Erasmus+ Programme of the European Union grant (574547).
Keywords: Bank profit persistence, international comparison, ownership types, financial crisis
Classification Codes: JEL G21, L11
Version of the Document: Published
Depositing User: Gertraud Novotny
Date Deposited: 13 Jul 2018 09:15
Last Modified: 11 Nov 2018 09:32
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