Relevance of Size in Predicting Bank Failures

International Journal of Finance and Economics (Forthcoming)

60 Pages Posted: 31 Jul 2018 Last revised: 22 Jun 2020

See all articles by Basim Alzugaiby

Basim Alzugaiby

University of Birmingham

Jairaj Gupta

University of York

Andy W. Mullineux

University of Birmingham

Rizwan Ahmed

University of Birmingham

Date Written: July 9, 2018

Abstract

Employing a statistical model-building strategy, this study aims to empirically analyse the United States’ bank failures across different size categories (small, medium, and large). Our results suggest that factors associated with bank failures vary across respective size categories, and the Average Marginal Effects (AMEs) of mutually significant covariates also exhibit significant variability across different size classes of banks. The results are robust to up-to three years of lagged regression estimates, various control variables, interaction between bank size and bank charter, alternative bank size classifications, and macroeconomic crisis periods.

Keywords: bank size, bank failure, default risk, survival analysis, banking

JEL Classification: G01, G21, G28

Suggested Citation

Alzugaiby, Basim and Gupta, Jairaj and Mullineux, Andy W. and Ahmed, Rizwan, Relevance of Size in Predicting Bank Failures (July 9, 2018). International Journal of Finance and Economics (Forthcoming), Available at SSRN: https://ssrn.com/abstract=3210959 or http://dx.doi.org/10.2139/ssrn.3210959

Basim Alzugaiby

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

Jairaj Gupta (Contact Author)

University of York ( email )

University of York Management School
Church Lane Building
York, North Yorkshire YO10 5ZF
United Kingdom

Andy W. Mullineux

University of Birmingham ( email )

Birmingham Business School
University House
Birmingham, B15 2TT
United Kingdom

Rizwan Ahmed

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

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