Chiaku Chukwuogor
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Comparative Performance Evaluation of Small, Medium and Large U.S. Commercial Banks
Chiaku Chukwuogor , Jill Wetmore -
An empirical analysis of the determinants of the U.S. banks’ profitability
Chiaku Chukwuogor , Emmanuel Anoruo , Ikechukwu Ndu doi: doi http://dx.doi.org/10.21511/bbs.16(4).2021.17Banks and Bank Systems Volume 16, 2021 Issue #4 pp. 209-217
Views: 691 Downloads: 164 TO CITE АНОТАЦІЯThis study investigates the determinants of the profitability of U.S. banks. Employing quarterly data, this paper further examines the historical and recent trends for all U.S. banks from 1996 to 2019 in the relationship between return and assets (ROA) and other bank internal (or endogenous) profitability contributors such as net interest margin (NIM), loan loss reserves, ratio of non-performing loans to gross loans, and external (or exogenous) macroeconomic variables, such as the 30-year average mortgage rate, Gross Domestic Product (GDP) economic growth rate, unemployment rate, interest rate, inflation rate and openness (i.e., exports + imports/GDP) by using the Generalized Method of Moments (GMM) estimator technique. The results reveal that bank-specific variables, including net interest margin, loan loss reserves and non-performing loans, have a significant impact on bank profitability in the United States. Similarly, the results show that macroeconomic variables, namely the average mortgage rate, economic growth, and unemployment rate, exert significant effects on the U.S. banks’ profitability. The results further indicate that changes in openness are detrimental to bank profitability. The implications are discussed.