THE RISE AND GROWTH OF CHALLENGER BANKS IN THE UK: A profitability and efficiency study
This study examines the determinants of profitability for a selection of UK banks and building societies and analyses their efficiency over the period 2014-2020. A single-step Stochastic Frontier Analysis is used for cost efficiency analysis, and profitability is analysed through a series of OLS, fi...
| Main Author: | |
|---|---|
| Format: | Dissertation (University of Nottingham only) |
| Language: | English |
| Published: |
2022
|
| Subjects: | |
| Online Access: | https://eprints.nottingham.ac.uk/67996/ |
| _version_ | 1848800457201287168 |
|---|---|
| author | Bennison, Matthew |
| author_facet | Bennison, Matthew |
| author_sort | Bennison, Matthew |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | This study examines the determinants of profitability for a selection of UK banks and building societies and analyses their efficiency over the period 2014-2020. A single-step Stochastic Frontier Analysis is used for cost efficiency analysis, and profitability is analysed through a series of OLS, fixed effects and random effects models for a panel data set to analyse the key determinants of UK bank profitability. The results demonstrate that challenger banks are less cost efficient and that their cost efficiency is more volatile than larger banks, particularly during times of hardship or uncertainty like the pandemic. The results from the regressions indicate that the largest banks experience higher profitability and efficiency, since size is statistically significant and positively related to profitability, but evidence of diminishing returns to scale are found to a point where the largest firms experience a negative relationship between increasing size and profitability. Challenger banks experience a positive relationship with cost-to-income but a negative relationship with equity-to-assets, whereas the largest firms see the opposite results. |
| first_indexed | 2025-11-14T20:51:52Z |
| format | Dissertation (University of Nottingham only) |
| id | nottingham-67996 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T20:51:52Z |
| publishDate | 2022 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-679962023-04-27T14:50:10Z https://eprints.nottingham.ac.uk/67996/ THE RISE AND GROWTH OF CHALLENGER BANKS IN THE UK: A profitability and efficiency study Bennison, Matthew This study examines the determinants of profitability for a selection of UK banks and building societies and analyses their efficiency over the period 2014-2020. A single-step Stochastic Frontier Analysis is used for cost efficiency analysis, and profitability is analysed through a series of OLS, fixed effects and random effects models for a panel data set to analyse the key determinants of UK bank profitability. The results demonstrate that challenger banks are less cost efficient and that their cost efficiency is more volatile than larger banks, particularly during times of hardship or uncertainty like the pandemic. The results from the regressions indicate that the largest banks experience higher profitability and efficiency, since size is statistically significant and positively related to profitability, but evidence of diminishing returns to scale are found to a point where the largest firms experience a negative relationship between increasing size and profitability. Challenger banks experience a positive relationship with cost-to-income but a negative relationship with equity-to-assets, whereas the largest firms see the opposite results. 2022-03-10 Dissertation (University of Nottingham only) NonPeerReviewed application/pdf en https://eprints.nottingham.ac.uk/67996/1/Final%20Dissertation.v8.pdf Bennison, Matthew (2022) THE RISE AND GROWTH OF CHALLENGER BANKS IN THE UK: A profitability and efficiency study. [Dissertation (University of Nottingham only)] UK Banking profitability efficiency challenger bank |
| spellingShingle | UK Banking profitability efficiency challenger bank Bennison, Matthew THE RISE AND GROWTH OF CHALLENGER BANKS IN THE UK: A profitability and efficiency study |
| title | THE RISE AND GROWTH OF CHALLENGER BANKS IN THE UK:
A profitability and efficiency study |
| title_full | THE RISE AND GROWTH OF CHALLENGER BANKS IN THE UK:
A profitability and efficiency study |
| title_fullStr | THE RISE AND GROWTH OF CHALLENGER BANKS IN THE UK:
A profitability and efficiency study |
| title_full_unstemmed | THE RISE AND GROWTH OF CHALLENGER BANKS IN THE UK:
A profitability and efficiency study |
| title_short | THE RISE AND GROWTH OF CHALLENGER BANKS IN THE UK:
A profitability and efficiency study |
| title_sort | rise and growth of challenger banks in the uk:
a profitability and efficiency study |
| topic | UK Banking profitability efficiency challenger bank |
| url | https://eprints.nottingham.ac.uk/67996/ |