Single-equation, multiple-regression methodology: Is it an appropriate methodology for the estimation of the structure-performance relationship in banking?

Revisiting the Quiet Life Hypothesis in Banking Using Nonparametric Techniques

“…Some recent contributions have also dealt with the quiet life hypothesis and related issues, among which we can highlight the papers by Koetter et al (2012), Delis and Tsionas (2009), Casu and Girardone (2006), and Turk Ariss (2010. Although their objectives are not exactly coincidental with those of Clark (1986), they do neither consider flexible techniques to examine the links between efficiency and market power like we do.…”

“…Although theories are well established in our case, the mixed empirical evidence suggests they might be more difficult to test than one a priori might expect. Earlier initiatives, such as Clark (1986), considered similar issues, arguing that tests of the structure-performance paradigm yielded quantitatively small statistical significance because of the methodology employed. However, in contrast to a less restrictive nonparametric approach, his analysis was entirely confined to the parametric field, therefore disallowing more flexible interpretations of the relationship.…”

Market Structure, Risk and Profitability in Banking: the Quiet Life Hypothesis and Relative Economic Efficiency

“…To the best of our knowledge only five studies have attempted to test the structure-performance relationship by focusing attention on risk management as an additional objective of banks. These are the studies by Edwards and Heggestad (1973), Rhoades and Rutz (1982), Heggestad (1977) and Clark (1986aClark ( , 1986b. The first two papers report a statistically significant but negative relationship between risk and market concentration.…”

Is There Excess Capacity in Rural Banking Markets?

“…(b) look at the interrelationships between the three excess-capacity indicators, in a multivariate context, and (c) attempt to confirm the conclusions from our univariate analysis in a multivariate context. Graddy and Kyle (1979), Clark (1986aClark ( ) (1986b and Lindley, Verbrugge, McNulty and Cup (1992) ASSET COMPOSITION = f(CD rate, capital-to-assets ratio,…”