THE DETERMINANTS OF BANK PROFITABILITY: THE CASE OF U.S.

Author: 
Peer reviewed: 
No, item is not peer reviewed.
Scholarly level: 
Graduate student (Masters)
Date created: 
2019-12
Keywords: 
Bank profitability
GDP growth
inflation
size
capital
loans
deposits
noninterest income
Abstract: 

This paper analyses the determinants of bank profitability, using a sample of U.S. bank holding companies from 2002 to 2018. We discuss the impact of overall economy on the banking system as well as major political events and legislative reform during the period. To investigate the determinants statistically, we perform a regression analysis to examine the influence of macroeconomic and bank specific factors on profitability. Furthermore, we separately examine the relationship for small, medium-sized, and large banks. We find that a higher percentage of capital, loans or deposits in total assets, more noninterest income and faster GDP growth lead to higher bank profitability. In contrast, bank size, unemployment rate and inflation are negatively associated with bank profitability.

Description: 

MSc in Finance Project-Simon Fraser University.

Language: 
English
Document type: 
Graduating extended essay / Research project
Rights: 
Copyright remains with the author.
File(s): 
Supervisor(s): 
Jijun Niu
Department: 
Beedie School of Business-Segal Graduate School
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