Heterogeneous impact of Covid-19 on the US banking sector
Dennis Heitmann,
Mohammad Ashraful Chowdhury and
Mohammad Saiful Islam
The North American Journal of Economics and Finance, 2023, vol. 68, issue C
Abstract:
This study discusses the impact of Covid-19 on important financial performance indicators and risk indicators of US banks using quarterly panel data of the 87 insured U.S.-chartered commercial banks, covering periods from 2017 to 2021. Based on random effect and two step system GMM models, we provide strong empirical evidence of the adverse impact of the pandemic on important accounting and market-based measures and risk indicators. The presence of Covid-19 implies declining profitability, deteriorating cost efficiency and decreasing level 3 assets to securities ratios. It also adversely impacted key risk indicators by increasing credit risk and the risk of regulatory capital. Using quantile regression, we have also identified heterogeneity among banks in terms of financial performance and risk indicators. The findings of the study will add value in research to the existing literature and provide the newest findings to the stakeholders who are engaged with the US banking sector.
Keywords: Pandemic; Financial performance; Risk indicators; US banks; Quantile regression (search for similar items in EconPapers)
JEL-codes: C23 G01 G21 M4 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:68:y:2023:i:c:s1062940823001134
DOI: 10.1016/j.najef.2023.101990
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