Cyclical Properties of Bank Margins: Small versus Large Banks

Grochulski, Borys; Schwam, Daniel; Zhang, Yuzhe

doi:10.21144/eq1040101

Cited by 2 publications

(6 citation statements)

References 11 publications

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“…Overall, our results suggest that the bank’s response to FRPU differs based on their size measured through total assets. This finding supports Grochulski et al (2018) findings that small and large banks profitability (measured by NIM) respond in unique ways to cyclical changes in the macroeconomic environment. It is plausible that smaller banks may not have influential political interest groups that provide them with valuable lobbying power to diminish the unfavorable effects of financial regulatory changes.…”

Section: Resultssupporting

confidence: 87%

“…We anticipate a direct relationship between real GDP and profitability in line with the banking literature (e.g., Athanosoglou et al (2008), Albertazzi and Gambacorta (2009), Chronopoulos et al (2015)). Although some literature indicates a negative relationship between bank profitability and economic growth, this may be due to the varying impacts economic factors have on banks depending on their size (Grochulski et al, (2018))…”

Section: Economic Growth (Rgdp)mentioning

confidence: 99%

“…By choosing bank-level data to examine the impact of financial policy regulation policy uncertainty solely on banking performance, we avoid balance sheet and income statement activity related to affiliated non-banking business operations normally included/reported in BHCs. Other studies that examine bank-level data include Grochulski et al (2018), Egly et al (2018) and Chronopoulos et al (2015).…”

Section: Notesmentioning

confidence: 99%

“…This represents an important departure from existing banking regulation studies that, with only limited exceptions, typically focus on small banks, annual data on only the largest banks, or publically traded banks [see, for example, Cyree (2016), Feldman et al (2013) and Schäfer et al (2016)]. This is important because the impact of economic conditions (and in our case regulatory burden) on bank profits and risk is not necessarily consistent across banks of different asset size (Grochulski et al , 2018 and Dolar and Dale, 2019).…”

Section: Introductionmentioning

confidence: 97%

“…This study explores the following research questions: 1) Does financial regulation policy uncertainty (FRPU) impact bank profits proxied by Return on Assets (ROA) and Return on Equity 1 For a discussion of methodology concerns dealing with regulatory event studies, refer to Lamdin (2001) Cyree (2016), Feldman et al (2013) and Schafer et al (2016)). This is important because the impact of economic conditions (and in our case regulatory burden) on bank profits and risk is not necessarily consistent across banks of different asset size (Grochulski et al, 2018 andDale, 2019).…”

mentioning

confidence: 99%

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The impact of financial regulation policy uncertainty on bank profits and risk

Killins

Johnk

Egly

2019

SEF

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Purpose The purpose of this paper is to explore the impact of financial regulation policy uncertainty (FRPU) on bank profit and risk. Design/methodology/approach This study applies dynamic panel techniques and uses the Baker et al. (2016) FRPU index and macroeconomic variables to assess FRPU’s impact on bank profit and risk using Federal Deposit Insurance Corporation call reports from Q1 2000 to Q4 2016 for over 4,760 commercial banks. Findings The effect of FRPU on profitability (Return on Assets [ROA] and Return on Equity [ROE]) and risk (standard deviation of ROA and ROE) produces complex results. FRPU negatively (positively) impacts profits for small and large banks (money center banks). There is a positive impact on FRPU for small and medium-sized banks, with no impact reported for the large and money center banks. Practical implications Findings lead to several implications for financial services regulators, investors and executives as summarized in the conclusion. It is essential to ensure that clear communication channels are open especially to small and medium-sized banks for proper strategic planning, given their greater sensitivity to regulatory uncertainty. Originality/value This paper contributes to the literature as follows. First, it explores the impact of FRPU on bank profits and risk using a novel index introduced by Baker et al. (2016). This news-based continuous measure presents a bank profit modeling approach that differs from traditional event study methodology. Second, a large sample of US commercial banks is used which represents an important departure from banking regulation studies.

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Section: Resultssupporting

confidence: 87%

Section: Economic Growth (Rgdp)mentioning

confidence: 99%

Section: Notesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 97%

mentioning

confidence: 99%

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The impact of financial regulation policy uncertainty on bank profits and risk

Killins

Johnk

Egly

2019

SEF

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Does credit risk management impact the financial performance of commercial banks?

Fadun

Silwimba²

2023

IJBES

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Commercial banks accept deposits and lend money for investment and consumption. This study used five (5) first-tier banks in Nigeria as a case study to analyze the effects of credit risk management on the financial performance of commercial banks. The study examined fifteen (15) years' worth of panel data (from 2005 to 2019), taken from the audited financial reports of five first-tier listed banks. Deposit Money Banks (DMBs) are the only banks used, and they are all listed on the Nigerian Stock Exchange. Non-performing loans (NPL) and expected credit loss impairment provisions (ECL) were utilized in this study as indicators of credit risk management. At the same time, return on assets (ROA) was employed to measure financial performance.

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Cyclical Properties of Bank Margins: Small versus Large Banks

Cited by 2 publications

References 11 publications

The impact of financial regulation policy uncertainty on bank profits and risk

The impact of financial regulation policy uncertainty on bank profits and risk

Does credit risk management impact the financial performance of commercial banks?

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