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The long-term role of non-traditional banking in profitability and risk profiles: Evidence from a panel of U.S. banking institutions

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  • Apergis, Nicholas

Abstract

The goal of this empirical study is to identify empirically and on a panel basis how non-traditional bank activities affect directly the profitability and risk profiles of the financial institutions involved in such activities. Through a dataset that covers 1725 U.S. financial institutions involved in non-traditional bank activities spanning the period 2000–2013 and the methodology of panel cointegration, the empirical findings document that non-traditional bank activities exert a positive effect on both the profitability and the insolvency risk. The results could be important for regulators given they could serve as a pre-warning signal that sends a clear message to regulators about the potential systemic risk that exists within the financial markets.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 45 (2014)
Issue (Month): C ()
Pages: 61-73

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Handle: RePEc:eee:jimfin:v:45:y:2014:i:c:p:61-73

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Web page: http://www.elsevier.com/locate/inca/30443

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Keywords: Non-traditional bank activities; Profitability; Insolvency risk; U.S. banks; Panel data;

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