The Long-term Role of Non-traditional Banking in Profitability and risk profiles: Evidence from a panel of U.S. banking institutions
The goal of this empirical study is to identify empirically and on a panel basis how non-traditional bank activities affect directly the profitability and risk profiles of the financial institutions involved in such activities. Through a dataset that covers 1,725 U.S. financial institutions involved...
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| Format: | Journal Article |
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Pergamon
2014
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| Online Access: | http://hdl.handle.net/20.500.11937/30640 |
| Summary: | The goal of this empirical study is to identify empirically and on a panel basis how non-traditional bank activities affect directly the profitability and risk profiles of the financial institutions involved in such activities. Through a dataset that covers 1,725 U.S. financial institutions involved in non-traditional bank activities spanning the period 2000-2013 and the methodology of panel cointegration, the empirical findings document that non-traditional bank activities exert a positive effect on both the profitability and the insolvency risk. The results could be important for regulators given they could serve as a pre-warning signal that sends a clear message to regulators about the potential systemic risk that exists within the financial markets. |
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