Bank profitability during recessions

Wilko Bolt, Leo de Haan, Marco Hoeberichts, Maarten R C van Oordt*, Job Swank

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

This paper contributes to the literature on the relation between bank profitability and economic activity. When allowing for stronger co-movement of bank profit with economic activity during deep recessions, we find a much larger impact of output growth on bank profitability than commonly found in the literature. Among the different components of bank profit, loan losses are the main driver of this result. We also find long-term interest rates in previous years to be important determinants of bank profit in times of high economic growth. Our findings are robust to the use of aggregate or individual bank data.

Original languageEnglish
Pages (from-to)2552-2564
Number of pages13
JournalJournal of Banking and Finance
Volume36
Issue number9
DOIs
Publication statusPublished - Sep 2012

Keywords

  • Bank profitability
  • Business cycle
  • Loan losses
  • Recession

Fingerprint

Dive into the research topics of 'Bank profitability during recessions'. Together they form a unique fingerprint.

Cite this