Integration Among US Banks

39 Pages Posted: 25 Sep 2019

See all articles by Abhinav Anand

Abhinav Anand

IIM Bangalore

John Cotter

University College Dublin; University of California, Los Angeles (UCLA) - Anderson School of Management

Multiple version iconThere are 3 versions of this paper

Date Written: September 22, 2019

Abstract

We define and measure integration among a sample of 357 US banks over 25 years from 1993 to 2017 and show that the median US bank’s integration has increased significantly post-2005. During the great recession and the Eurozone crisis, integration levels among US banks display a significant rise over and above their trend. We find that bank size is the most economically and statistically significant characteristic in explaining integration levels. Size and the equity ratio show positive association with bank integration while the net interest margin and combined tier 1 and tier 2 capital ratio influence bank integration negatively. For regulators, abnormally high in- tegration levels indicate warning signs of potential distress in the banking sector.

Keywords: Bank integration, Bank size, Banking crises, Systemic risk, Principal component regressions

JEL Classification: G10, G21, G28, C32, C33, C38, C58

Suggested Citation

Anand, Abhinav and Cotter, John, Integration Among US Banks (September 22, 2019). Michael J. Brennan Irish Finance Working Paper Series Research Paper No. 19-5. Available at SSRN: https://ssrn.com/abstract=3459442 or http://dx.doi.org/10.2139/ssrn.3459442

Abhinav Anand (Contact Author)

IIM Bangalore ( email )

Bannerghatta Road
Bangalore, 560 076
India

John Cotter

University College Dublin ( email )

School of Business, Carysfort Avenue
Blackrock, Co. Dublin
Ireland
353 1 716 8900 (Phone)
353 1 283 5482 (Fax)

HOME PAGE: http://www.ucd.ie/bankingfinance/staff/professorjohncotter/

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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