Bank Size, Market Concentration, and Bank Earnings Volatility in the US
AbstractWe examine whether bank earnings volatility depends on bank size and the degree of concentration in the banking sector. Using quarterly data for non-investment banks in the United States for the period 2004Q1-2009Q4 and controlling for the quality of management, leverage, and diversification , we find that bank size reduces return volatility. The negative impact of bank size on bank earnings volatility decreases (in absolute terms) with market concentration. We also find that larger banks located in concentrated markets have experienced higher volatility during the recent financial crisis.
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Bibliographic InfoPaper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 282.
Date of creation: Mar 2011
Date of revision:
Bank Earnings Volatility; Bank Size; Market Concentration; Financial Crises;
Other versions of this item:
- De Haan, Jakob & Poghosyan, Tigran, 2012. "Bank size, market concentration, and bank earnings volatility in the US," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(1), pages 35-54.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-19 (All new papers)
- NEP-BAN-2011-03-19 (Banking)
- NEP-COM-2011-03-19 (Industrial Competition)
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