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Does geographical proximity matter in determining the profitability of banks?

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  • Ramlall, Indranarain

Abstract

Despite the existence of a burgeoning literature on bank profitability, yet, none of them gave due consideration to geographical proximity. I fulfill such a gap by analyzing the effects of COVID-19 on the profitability of top-rated banks. Findings confirm the prevalence of spatial dependence at both the global and sub-global with feedback effects being systematically higher than spillover effects. My study uncovers evidence of a COVID-19 induced decline in asset utilization. Findings advocate sharing economy as a potential tool to banks in combating any future pandemic risk with regionalized approach to supervision being deemed better than its globalized counterpart.

Suggested Citation

  • Ramlall, Indranarain, 2022. "Does geographical proximity matter in determining the profitability of banks?," Journal of Policy Modeling, Elsevier, vol. 44(6), pages 1251-1279.
    • Handle: RePEc:eee:jpolmo:v:44:y:2022:i:6:p:1251-1279
    DOI: 10.1016/j.jpolmod.2022.07.003
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