Integration Among US Banks

Anand, Abhinav; Cotter, John

doi:10.2139/ssrn.3460375

Integration Among US Banks

IIM Bangalore Research Paper No. 597/2019

51 Pages Posted: 27 Sep 2019 Last revised: 29 Sep 2020

See all articles by Abhinav Anand

John Cotter

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

There are 3 versions of this paper

Date Written: September 17, 2020

Abstract

We define and construct 'integration' for a large sample of 2287 US banks-measured by their level of exposure to common factors-during the period 1993-2019. Integration among US banks shows a steady increase and displays significantly high peaks during episodes of market distress such as the LTCM collapse, the Dotcom bust, the Great Recession and the Eurozone crisis. Regulatory intervention has improved US banks' capitalization, but it has not curtailed banks' exposure to common factors, which continues to rise unabated. Among characteristics associated with integration, we find that bank size is the most significant-both economically and statistically.

Keywords: Bank integration, Bank size, Banking crises, Systemically important banks, Bank risk, Principal component regressions

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

Suggested Citation: Suggested Citation

Anand, Abhinav and Cotter, John, Integration Among US Banks (September 17, 2020). IIM Bangalore Research Paper No. 597/2019, Available at SSRN: https://ssrn.com/abstract=3460375 or http://dx.doi.org/10.2139/ssrn.3460375