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The Persistence of Bank Profit

Author

Listed:
  • 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.

Suggested Citation

  • John Goddard & Hong Liu & Phil Molyneux & John O.S. Wilson, 2010. "The Persistence of Bank Profit," Working Papers 10002, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
  • Handle: RePEc:bng:wpaper:10002
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    References listed on IDEAS

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    More about this item

    Keywords

    Banking; competition; dynamic panel estimation; entry; profitability; persistence;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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