An Analysis of Capital Measures and Relative Bank Profitability

Southern Business Review, Vol. 12, No. 1, pp. 18-31, Spring 1986

Robert H. Smith School Research Paper No. RHS 2615367

15 Pages Posted: 8 Jun 2015 Last revised: 29 Dec 2015

See all articles by John A. Haslem

John A. Haslem

University of Maryland - Robert H. Smith School of Business; University of Maryland - Robert H. Smith School of Business

James Bedingfield

University of Maryland - Robert H. Smith School of Business

Anthony Stagliano

University of Maryland

Date Written: August 16, 2015

Abstract

This study reports the results of a longitudinal analysis of the nature of the association between selected bank capital (book value) measures and relative profitability, with emphasis on high-performance banks. Capital management is a major component variable in bank financial management. Interest in bank capital has been stimulated recently b deregulation and the rash of bank failures. Conceptually, every decision should be considered for its impact on the maximization of shareholder wealth. However, in a world of uncertainty, regulation, and limited action/reaction time and resources, it is not possible to follow the conceptually correct approach for the multitude of decisions bankers face. One practical approach to the complex, interactive nature of bank decisions is to disaggregate them into key variables for financial management: (1) "spread management" (net interest margin), (2) overhead expense control, (3) liquidity management, and (4) capital management. Both liquidity and capital management are related to the risk component of bank financial management, while the other two variables are related to the income competent.

Suggested Citation

Haslem, John A. and Haslem, John A. and Bedingfield, James and Stagliano, Anthony, An Analysis of Capital Measures and Relative Bank Profitability (August 16, 2015). Southern Business Review, Vol. 12, No. 1, pp. 18-31, Spring 1986, Robert H. Smith School Research Paper No. RHS 2615367, Available at SSRN: https://ssrn.com/abstract=2615367

John A. Haslem (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742
United States
202-387 2025 (Phone)

University of Maryland - Robert H. Smith School of Business ( email )

5901 MacArthur Blvd NW 124
Washington, DC DC 20016
United States
202-236 3172 (Phone)

James Bedingfield

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Anthony Stagliano

University of Maryland ( email )

College Park
College Park, MD 20742
United States

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