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Bank Size, Market Concentration, and Bank Earnings Volatility in the US

  • Jacob de Haan
  • Tigran Poghosyan

We 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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Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 282.

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Date of creation: Mar 2011
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Handle: RePEc:dnb:dnbwpp:282
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Web page: http://www.dnb.nl/en/

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