US Community Bank Profitability: A Cross-Sectional and Dynamic Panel Analysis of Rural and Metropolitan Banks, Global Journal of Accounting and Finance, 4(1), 158-177.
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This study compares 5,286 community banks operating in rural and metropolitan counties from 2000 through the end of 2013 on the variables attributing to bank profitability using pooled OLS, pooled time-series OLS, and dynamic panels methodologies. Following the SCP and competition-fragility literature, one would expect a difference in the variables contributing to profitability. The size of the coefficients indicates that the variables contributing to profitability differ in magnitude when comparing community banks in metropolitan counties to those in rural counties. Both the pooled and time-series OLS models indicate that bank size contributes to profitability more in metropolitan areas.
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More competition among banks typically enhances the welfare of consumers. However, it may also involve a threat to financial stability, that is of vital importance for the functioning of economies. This study reveals that many forms of competition do not endanger financial stability, however. For instance, intensified competition among incumbant banks usually has little impact on financial stability. Moreover, in cases where competition does affect financial stability, the latter might best be safeguarded by sound prudential regulation or good corporate governance.
I. The concentration-profits hypothesis, 294. — II. Industry definition, measure of concentration, and selection of sample, 297. — III. Character and limitations of profit data, 305. — IV. Calculation of accounting profit rates, 310. — V. Association of industry profit rates and concentration, 311. — VI. Association of firm profit rates and industry concentration, 317. — VII. Association of profit rates with other determinants, 321. — VIII. Summary, 323. Copyright, 1951, by the President and Fellows of Harvard College.
The banking legislation of the 1930s took very little time to pass, was unusually comprehensive, and unusually responsive
to public opinion. Ironically, the primary motivations for the main bank regulatory reforms in the 1930s (Regulation Q, the
separation of investment banking from commercial banking, and the creation of federal deposit insurance) were to preserve
and enhance two of the most disastrous policies that contributed to the severity and depth of the Great Depression—unit banking
and the real bills doctrine. Other regulatory changes, affecting the allocation of power between the Federal Reserve System
(Fed) and the Treasury, were intended to reduce the independence of the Fed, while giving the opposite impression. Banking
reforms in the 1930s had significant negative consequences for the future of US banking, and took a long time to disappear.
The overarching lesson is that the aftermath of crises are moments of high risk in public policy.
When companies decide to engage in technology transfer through exclusive licensing to other firms, they have two basic options: to use standard licensing contracts or to set-up more elaborate partnership-embedded licensing agreements. We find that broader partnership-embedded licensing agreements are preferred with higher levels of technological sophistication of industries, with greater perceived effectiveness of secrecy as a means of appropriability, and when licensors are smaller than their licensees. Innovative differential between companies, innovative supremacy of the licensor and market and technological overlap between partners appear to have no effect on the preference for a particular form of licensing. Copyright 2009 , Oxford University Press.
Contrary to conventional wisdom, bank capital ratios are positively related to returns on equity in the 1980s. Higher capital Granger-caused higher earnings and vice versa for U.S. banks, 1983-89. The surprising positive Granger-causation from capital to earnings occurred primarily through lower interest rates paid on uninsured purchased funds. The data support the hypothesis that expected bankruptcy costs for banks increased substantially in the 1980s, raising optimal capital ratios. The causation from capital to earnings became negative in the early 1990s, when aggregate risk, regulation, and earnings changed, but the findings still support the expected bankruptcy costs hypothesis. Copyright 1995 by Ohio State University Press.
This paper enters the debate between market-power and efficient-structure explanations of the profit-structure relationship in banking by including direct measures of X-efficiency and scale efficiency in the analysis. Structural models of two market-power hypotheses and two efficient-structure hypotheses are expressed in testable reduced form profit equations. This methodology is applied to thirty cross-sections of 1980s banking data. These data are somewhat consistent with one of the market-power and one of the efficient-structure hypotheses. However, none of the hypotheses are overwhelmingly important in explaining bank profits, suggesting that alternative theories be pursued. Copyright 1995 by Ohio State University Press.