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Beta convergence and sigma convergence of key financial ratios post the Great Recession: community banks vs. non-community banks

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  • Su-Jane Chen

    (Metropolitan State University of Denver)

Abstract

This study investigates whether there is a convergence in key U.S. bank financial ratios for the period of 2010-2017, the immediate aftermath of the Great Recession. It reveals both beta and sigma convergences and suggests a progression of bank profitability, capital sufficiency, and liquidity towards a common level and a reduction of cross-sectional dispersion over time. This research also examines the convergence speed of two bank groups, community banks and non-community banks, given their drastically different business models, geographical coverage, and size. The test results show that community banks in general adjust at a slower speed than non-community banks.

Suggested Citation

  • Su-Jane Chen, 2023. "Beta convergence and sigma convergence of key financial ratios post the Great Recession: community banks vs. non-community banks," Economics Bulletin, AccessEcon, vol. 43(2), pages 922-933.
    • Handle: RePEc:ebl:ecbull:eb-23-00088
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Community banks; Non-Community banks; Beta convergence; Sigma convergence; Great Recession;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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