The Persistence of Profits in Banking: An International Comparison

Klaus Gugler, Evgeni Peev

Publication: Scientific journalJournal articlepeer-review

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Abstract

This article examines the dynamics of bank profitability in the USA, Germany, Great Britain, France, Italy and Switzerland over the period 1993–2014. We find long-run bank profit persistence in all six countries in the period before the financial crisis in 2008. Banks with large capital ratios are persistently more profitable, and there is little evidence of a link between bank size and the persistence of bank profits. Commercial (saving) banks are persistently more (less) profitable in four of the six countries. The effects of the financial crisis in 2008 differed dramatically across countries as well as across ownership types. While US banks experienced dramatic declines in the immediate aftermath of the crisis, they recovered much faster than their European counterparts and essentially retain their long run profit potential by the year 2014.
Original languageEnglish
Pages (from-to)5996 - 6009
JournalApplied Economics
Volume50
Issue number55
DOIs
Publication statusPublished - 2018

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 502013 Industrial economics

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