The Causal Relationship between Bank Capital and Profitability
19 Pages Posted: 15 Jan 2007
Date Written: 2006
Abstract
This paper examines the causal relationship between the return on equity and financial leveragae in the U.S. banking industry. For the periods 1983-1989 and 1996-2002 we find there is a negative connection between bank capital and equity profitability except for the best performing banks.
Keywords: Banks, Capital, Profitability
JEL Classification: G21, G32
Suggested Citation: Suggested Citation
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