Nonlinear effect of subordinated debt changes on bank performance

Doojin Ryu and Jinyoung Yu

Finance Research Letters, 2021, vol. 38, issue C

Abstract: We investigate whether changes in subordinated debt have a nonlinear effect on bank performance. Subordinated debt changes negatively affect bank performance, both linearly and quadratically. Increases in subordinated debt, namely, issuances, deteriorate (increase) bank profitability (insolvency risk), while the effects of the debt decreases, namely, redemptions, are insignificant.

Keywords: Bank performance; Debt issuances; Debt redemptions; Nonlinearity; Panel data regression; Subordinated debt (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:38:y:2021:i:c:s1544612320301112

DOI: 10.1016/j.frl.2020.101496

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