Dissertation
Analysis of the profitability, liquidity and capital of small and large banks in the United States
Doctor of Philosophy (Ph.D.), Drexel University
May 2019
DOI:
https://doi.org/10.17918/430y-8g18
Abstract
We analyze the profitability, liquidity and capital structure of small and large banks in the United States in three essays. In the first essay, we study the impact of the Basel III liquidity constraints by focusing on different conditional profitability spectrums or quantiles. Our results highlight that liquidity regulations should be tailored based on the bank size and on the relative profitability of each bank. We also find that the Basel III liquidity constraints have successfully made the entire financial system less prone to an industry-wide liquidity crisis while hardly impacting the profitability of banks. The second essay explains that the apparent non-consensus in the bank liquidity literature regarding whether banks hoarded liquidity during the 2007-2009 financial crisis is due to wrongly focusing on aggregate loans and deposits or on a single type of loans or deposits instead of focusing on the series disaggregated by type and maturity level. Accurately understanding bank liquidity supply informs policy makers to become more specific by shedding light on how different types of loans and deposits are affected differently when market conditions tighten. In the third essay, we find that out of the four factors widely identified in the literature as determinants of a bank's capital structure, namely, the market-to-book ratio, collateral, profitability and size, only profitability remains significant when we account for the cross-section dependence of errors in the data. The three factors that we retain as determinants of bank leverage are retained earnings, non-interest expenses and profitability. Our results highlight the importance of accounting for the cross section dependence of the errors in the data when studying the capital structure of U.S. banks.
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Details
- Title
- Analysis of the profitability, liquidity and capital of small and large banks in the United States
- Creators
- Sathiavanee Veeramoothoo - DU
- Contributors
- Shawkat M. Hammoudeh (Advisor) - Drexel University (1970-)
- Awarding Institution
- Drexel University
- Degree Awarded
- Doctor of Philosophy (Ph.D.)
- Publisher
- Drexel University; Philadelphia, Pennsylvania
- Number of pages
- ix, 192 pages
- Resource Type
- Dissertation
- Language
- English
- Academic Unit
- Economics (School of Economics); Bennett S. LeBow College of Business; Drexel University
- Other Identifier
- 10919; 991014632344804721