Bank profitability during recessions

W Bolt, MM Hoeberichts, L de Haan, MRC (Maarten) van Oordt, Job Swank

Research output: Contribution to journalArticleAcademicpeer-review

72 Citations (Scopus)

Abstract

This paper contributes to the literature on the relation between bank profitability and economic activity. When allowing for stronger co-movement of bank profit with economic activity during deep recessions, we find a much larger impact of output growth on bank profitability than commonly found in the literature. Among the different components of bank profit, loan losses are the main driver of this result. We also find long-term interest rates in previous years to be important determinants of bank profit in times of high economic growth. Our findings are robust to the use of aggregate or individual bank data.
Original languageEnglish
Pages (from-to)2552-2564
Number of pages13
JournalJournal of Banking and Finance
Volume36
DOIs
Publication statusPublished - 6 Jun 2012

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