Bank health in varying macroeconomic conditions: A panel study
AbstractUsing panel data on selected Financial Soundness Indicators (FSIs) this paper investigates the potential strengths and vulnerabilities of financial intermediaries across more than 50 countries. Our econometric analysis reveals strong influence of business cycle, inflation, and real effective exchange rates, and size of the industry on capital adequacy --a core indicator of banks' financial soundness. Furthermore, our analyses provide evidence that banks' profitability is determined by a combination of macroeconomic, bank specific and industry characteristics such as business cycle, inflation, credit risk, capital adequacy, and the level of competition.
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Bibliographic InfoArticle provided by Elsevier in its journal International Review of Financial Analysis.
Volume (Year): 18 (2009)
Issue (Month): 5 (December)
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Web page: http://www.elsevier.com/locate/inca/620166
Global financial stability Financial Soundness Indicators Generalized Method of Moments Financial intermediaries;
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