Determinants of the Rate of Return on Commercial Bank Assets, 1933-1998

Cebula, Richard (1999): Determinants of the Rate of Return on Commercial Bank Assets, 1933-1998. Published in: Global Business & Economics Review--Anthology 2000 , Vol. 2, No. 1 (14 December 2000): pp. 36-39.

Abstract

This empirical study seeks to identify, for the period 1933-1998, determinants of the rate of return on bank assets (ROA). The study finds that the ROA has been an increasing function of the interest rate yield on bank loans to the private sector, the growth rate of real GDP, and the percentage of deposits covered by federal deposit insurance. In addition, the ROA appears to have benefited from the implementation of provisions in the Federal Deposit Insurance Corporation Improvement Act of 1991. Finally, increased financial services industry competition has reduced the ROA.

• Item Type: MPRA Paper
• English Title: Determinants of the Rate of Return on Commercial Bank Assets, 1033-1998
• Language: English
• Keywords: rate of return; commercial bank performance; deposit insurance; interest rate charges
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance ; Insurance Companies ; Actuarial Studies; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M2 - Business Economics > M21 - Business Economics

References

Amos, 0.M., "The Regional Distribution of Bank Closings in the United States from 1982 to 1988," Southern Economic Journal, Vol. 58, No. 3, January 1992, pp. 805-15.

Barth, J.R. (1991), The Great Savings and Loan Debacle (American Enterprise Institute, 1991).

Barth, J.R, Brumbaugh, R.D., and Litan, R.E., The Future of American Banking (M.E. Sharpe, 1992).

Cebula, R.J., "A Current Evaluation of U.S. Banking Legislation: The FDICIA and Its Performance in Terms of Financial Services Industry Impacts," Swiss Journal of Economics and Statistics, Vol. 135, No. 2, June 1999, pp. 145-64.

Cebula, R.J., "The Regional Distribution of Failures in the United States: An Extension of the Amos Analysis," Southern Economic Journal, Vol. 61, No. 1, July 1994, pp. 202-8.

Chao, R.Y and Cebula, R.J., "Determinants of Geographic Differentials in the Savings and Loan Failure Rates: A Heteroskedastic-TOBIT Estimation," Journal of Financial Services Research, Vol. 10, No. 1, March 1966, pp. 5-25.

Kane, E.J., "The High Cost of Incompletely Funding the FSLIC's Shortage of Explicit Capital," Journal of Economic Perspectives, Vol. 3, No. 4, Fall 1989, pp. 31-47.

Loucks, C., "The Regional Distribution of Bank Closings in the United States: A Brief Note," Southern Economic Journal, Vol. 61, No. 1, July 1994, pp. 191-4.

Saltz, I.S., "FDIC Coverage and Bank Failures: Co-integration Analysis," International; Advances in Economic Research, Vol. 3, No. 1, February 1997, pp. 71-80.

Saltz, I.S., "The Impact of Federal Deposit Insurance on S&L Failures: Comment," Southern Economic Journal, Vol. 62, No. 1, July 1995, pp. 202-5.