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The effects of income and population demographics on single-county bank performance

Author

Listed:
  • Ken B. Cyree

    (University of Mississippi)

  • Brandon C. L. Morris

    (Wright State University)

Abstract

We investigate the role market demographics play in determining the accounting performance of banks. Specifically, we study the effect of wealth and population to determine if these market factors drive performance, or if performance is related only to bank-specific variables. Using a sample of single-county banks, we find that market demographics play an important role in determining bank performance. Our univariate findings show banks that operate in low population counties outperform those in high population counties. We also show the lowest performing group of banks operates in counties characterized by high population and high income. Our multivariate tests confirm that as county-level population decreases, bank performance increases. Moreover, we observe a significant low-income advantage after controlling for other determinants of profitability. We also find that low population levels significantly mitigate the negative effects of the 2008 financial crisis for small, single-county banks.

Suggested Citation

  • Ken B. Cyree & Brandon C. L. Morris, 2018. "The effects of income and population demographics on single-county bank performance," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 42(1), pages 174-190, January.
    • Handle: RePEc:spr:jecfin:v:42:y:2018:i:1:d:10.1007_s12197-017-9392-z
    DOI: 10.1007/s12197-017-9392-z
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    More about this item

    Keywords

    Bank performance; Bank growth; Profit efficiency; Macroeconomic; Local banks;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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