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.
MSc in Finance Project-Simon Fraser University.
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