Bank Size, Market Concentration, and Bank Earnings Volatility in the US

30 Pages Posted: 17 Jan 2011 Last revised: 3 Oct 2011

See all articles by Tigran Poghosyan

Tigran Poghosyan

International Monetary Fund (IMF)

Jakob de Haan

University of Groningen - Faculty of Economics and Business; De Nederlandsche Bank; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: January 16, 2011

Abstract

We examine whether bank earnings volatility depends on bank size and the degree of concentration in the banking sector. Using quarterly data for non-investment banks in the United States for the period 2004Q1-2009Q4 and controlling for the quality of management, leverage, and diversification, we find that bank size reduces return volatility. The negative impact of bank size on bank earnings volatility decreases (in absolute terms) with market concentration. We also find that larger banks located in concentrated markets have experienced higher volatility during the recent financial crisis.

Keywords: Bank Earnings Volatility, Bank Size, Market Concentration, Financial Crises

JEL Classification: G21, G32, L25

Suggested Citation

Poghosyan, Tigran and de Haan, Jakob, Bank Size, Market Concentration, and Bank Earnings Volatility in the US (January 16, 2011). Available at SSRN: https://ssrn.com/abstract=1742082 or http://dx.doi.org/10.2139/ssrn.1742082

Tigran Poghosyan (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jakob de Haan

University of Groningen - Faculty of Economics and Business ( email )

PO Box 800
Groningen, 9700 AV
Netherlands
+31 0 50 3633706 (Fax)

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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