The Dynamics of US Bank Profitability

Forthcoming, European Journal of Finance

32 Pages Posted: 15 Dec 2011 Last revised: 21 Mar 2018

See all articles by Dimitris K. Chronopoulos

Dimitris K. Chronopoulos

University of St. Andrews - School of Management

Hong Liu

University of Aberdeen

Fiona Jayne McMillan

University of St. Andrews

John O. S. Wilson

University of St. Andrews

Date Written: February 28, 2013

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.

Keywords: banking, crisis, deregulation, profitability, persistence, regulation

JEL Classification: G21, L11

Suggested Citation

Chronopoulos, Dimitris K. and Liu, Hong and McMillan, Fiona Jayne and Wilson, John O. S., The Dynamics of US Bank Profitability (February 28, 2013). Forthcoming, European Journal of Finance . Available at SSRN: https://ssrn.com/abstract=1972835 or http://dx.doi.org/10.2139/ssrn.1972835

Dimitris K. Chronopoulos

University of St. Andrews - School of Management ( email )

The Gateway
North Haugh
St. Andrews, Fife, Scotland KY16 9SS
United Kingdom

Hong Liu

University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Fiona Jayne McMillan

University of St. Andrews ( email )

North St
St Andrews, Fife KY16 9AJ
United Kingdom

John O. S. Wilson (Contact Author)

University of St. Andrews ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

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