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The persistence of profits in banking: an international comparison

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  • Klaus Gugler
  • Evgeni Peev

Abstract

This article examines the dynamics of bank profitability in the USA, Germany, Great Britain, France, Italy and Switzerland over the period 1993–2014. We find long-run bank profit persistence in all six countries in the period before the financial crisis in 2008. Banks with large capital ratios are persistently more profitable, and there is little evidence of a link between bank size and the persistence of bank profits. Commercial (saving) banks are persistently more (less) profitable in four of the six countries. The effects of the financial crisis in 2008 differed dramatically across countries as well as across ownership types. While US banks experienced dramatic declines in the immediate aftermath of the crisis, they recovered much faster than their European counterparts and essentially retain their long run profit potential by the year 2014.

Suggested Citation

  • Klaus Gugler & Evgeni Peev, 2018. "The persistence of profits in banking: an international comparison," Applied Economics, Taylor & Francis Journals, vol. 50(55), pages 5996-6009, November.
    • Handle: RePEc:taf:applec:v:50:y:2018:i:55:p:5996-6009
    DOI: 10.1080/00036846.2018.1489111
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    Cited by:

    1. Killins, Robert N. & Mollick, Andre V., 2020. "Performance of Canadian banks and oil price movements," Research in International Business and Finance, Elsevier, vol. 54(C).
    2. Burkhard Raunig & Michael Sigmund, 2023. "Watching over 21,000 Billion Euros: Does the ECB Single Supervisory Mechanism Affect Bank Competition in the Euro Area? (Burkhard Raunig, Michael Sigmund)," Working Papers 250, Oesterreichische Nationalbank (Austrian Central Bank).
    3. Khaoula Aliani & Fadhila Hamza & Noha Alessa & Hela Borgi & Khaldoon Albitar, 2024. "ESG disclosure in G7 countries: Do board cultural diversity and structure policy matter?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3031-3042, July.
    4. Ignatius Roni Setyawan & Margarita Ekadjaja & Agustin Ekadjaja, 2022. "Industry Market Structure and Banking Performance in Indonesia," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 11, March.

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