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The Persistence of Bank Profit

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  • John Goddard

    ()
    (Bangor University)

  • Hong Liu

    (Bangor Business School)

  • Phil Molyneux

    ()
    (Bangor University)

  • John O.S. Wilson

    (University of St Andrews)

Abstract

This paper examines the strength of competition in 65 national banking industries. Country-level dynamic panel estimates of the persistence of bank profit are reported and compared. The persistence of bank profit appears to be weaker for banks in developing countries than for those in developed countries. Persistence is relatively high in North America and Western Europe and relatively low in East Asia, the Pacific and Sub-Saharan Africa. The persistence of profit is stronger when entry barriers are high, and when competition is low according to both structure- and conduct-based competition indicators.

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Bibliographic Info

Paper provided by Bangor Business School, Prifysgol Bangor University (Cymru / Wales) in its series Working Papers with number 10002.

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Length: 43 pages
Date of creation: Feb 2010
Date of revision:
Handle: RePEc:bng:wpaper:10002

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Web page: http://www.bangor.ac.uk/business/research/
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Keywords: Banking; competition; dynamic panel estimation; entry; profitability; persistence;

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References

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Citations

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Cited by:
  1. Wahyoe Soedarmono & Amine Tarazi, 2014. "Market structure, financial intermediation and riskiness of banks:Evidence from Asia Pacific," Working Papers, HAL hal-00947575, HAL.
  2. Fu, Xiaoqing (Maggie) & Lin, Yongjia (Rebecca) & Molyneux, Philip, 2014. "Bank competition and financial stability in Asia Pacific," Journal of Banking & Finance, Elsevier, Elsevier, vol. 38(C), pages 64-77.
  3. Sergio SANFILIPPO AZOFRA & Maria CANTERO SAIZ & Begona TORRE OLMO & Carlos LOPEZ GUTIERREZ, 2013. "Financial Crises, Concentration and Efficiency: Effects on Performance and Risk of Banks," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, Charles University Prague, Faculty of Social Sciences, vol. 63(6), pages 537-558, December.
  4. Giorgio Canarella & Stephen M. Miller & Mahmoud M. Nourayi, 2012. "Firm Profitability: Mean-Reverting or Random-Walk Behavior?," Working papers, University of Connecticut, Department of Economics 2012-05, University of Connecticut, Department of Economics, revised Oct 2012.
  5. Hong Liu & Phil Molyneux & John O. S. Wilson, 2013. "Competition And Stability In European Banking: A Regional Analysis," Manchester School, University of Manchester, University of Manchester, vol. 81(2), pages 176-201, 03.
  6. Delis, Manthos & Karavias, Yiannis, 2013. "Optimal versus realized bank credit risk and monetary policy," MPRA Paper 49795, University Library of Munich, Germany.
  7. Amici, Alessandra & Fiordelisi, Franco & Masala, Francesco & Ricci, Ornella & Sist, Federica, 2013. "Value creation in banking through strategic alliances and joint ventures," Journal of Banking & Finance, Elsevier, Elsevier, vol. 37(5), pages 1386-1396.
  8. Chien-Chiang Lee & Meng-Fen Hsieh, 2013. "Beyond Bank Competition and Profitability: Can Moral Hazard Tell Us More?," Journal of Financial Services Research, Springer, Springer, vol. 44(1), pages 87-109, August.
  9. Krzysztof Jackowicz & Oskar Kowalewski & Łukasz Kozłowski, 2011. "The Short and Long Term Performance Persistence in the Central European Banking Industry," Contemporary Economics, University of Finance and Management in Warsaw, University of Finance and Management in Warsaw, vol. 5(4), December.

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