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How are the United States Banks faring during the COVID-19 Pandemic? Evidence of Economic Efficiency Measures

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  • Sakouvogui Kekoura
  • Guilavogui Mama Genevieve

Abstract

Due to the current lockdown and restrictions related to the COVID-19, U.S. commercial and domestic banks are facing cashflow and financial difficulties. This has led to many vulnerable customers losing their source of income. In this paper, we examine the importance of financial liquidity and solvency on U.S. commercial and domestic banks’ efficiency during the COVID-19. This paper adopts the Data Envelopment Analysis’ estimator in a two-step procedure. First, economic efficiency measures of 16,830 December quarterly observations of U.S. commercial and domestic banks are estimated from December 2010 to December 2020. Within each year, 1,530 U.S. commercial and domestic banks are selected. Second, using Tobit and panel fixed effect regression models, the importance of both liquidity and solvency risks on economic efficiency during the COVID-19 is examined. Empirical estimates indicate that both liquidity and solvency financial factors negatively affect the economic efficiency measures of U.S. commercial and domestic banks during the COVID-19.

Suggested Citation

  • Sakouvogui Kekoura & Guilavogui Mama Genevieve, 2022. "How are the United States Banks faring during the COVID-19 Pandemic? Evidence of Economic Efficiency Measures," Open Economics, De Gruyter, vol. 5(1), pages 11-29, January.
    • Handle: RePEc:vrs:openec:v:5:y:2022:i:1:p:11-29:n:1
    DOI: 10.1515/openec-2022-0117
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    More about this item

    Keywords

    COVID-19; DEA; Liquidity; Solvency;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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