Does Regional Economic Performance Affect Bank Conditions? New Analysis of an Old Question
The idea that regional economic performance affects bank health is intuitive and broadly consistent with the aggregate banking data. That said, micro-level research on this relationship provides a mixed picture of the importance, size, and timing of regional variables for bank performance. This paper helps reconcile the heterogeneous findings of previous research by: (1) employing a unique quot;composite measurequot; of regional economic performance that combines several regional indicators into a single index; (2) constructing bank-specific measures of regional economic conditions, based on bank deposit shares, that account for banks' presence in several states; and (3) estimating models for all banks and intra- and inter-state banks separately. Empirical results based on this bank-specific composite regional measure point to a tractable link between regional economic performance and bank health. The importance of regional variables holds for both intra- and inter-state banks. Out-of-sample forecasts indicate that the composite index also helps tie down the relative riskiness of bank portfolios across states. Finally, although interstate banks do seem to diversify away some of their portfolio risk, our analysis suggests it is too soon to conclude that interstate banks are immune from regional influences
Year of publication: |
[2004]
|
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Authors: | Daly, Mary C. |
Other Persons: | Krainer, John (contributor) ; Lopez, Jose A. (contributor) |
Publisher: |
[2004]: [S.l.] : SSRN |
Saved in:
freely available
Extent: | 1 Online-Ressource (35 p) |
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Type of publication: | Book / Working Paper |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 28, 2003 erstellt |
Other identifiers: | 10.2139/ssrn.530782 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012738351
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