The Persistence of Bank Profit
33 Pages Posted: 3 Aug 2010 Last revised: 9 Jan 2011
Date Written: January 6, 2011
This paper examines the strength of competition in 65 national banking industries. Country level dynamic panel estimates of the persistence of bank profit are reported and compared. The persistence of bank profit appears to be weaker for banks in developing countries than for those in developed countries. Persistence is relatively high in North America and Western Europe, and relatively low in East Asia and the Pacific, and Sub-Saharan Africa. The persistence of profit is stronger when entry barriers are high, and when competition is low according to both structure- and conduct-based competition indicators.
Keywords: Banking, Competition, Dynamic Panel Estimation, Entry, Profitability, Persistence
JEL Classification: G21 L11
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