 Performance of Canadian banks and oil price movementsRobert N. Killins and Andre V. Mollick Research in International Business and Finance, 2020, vol. 54, issue C Abstract: We employ dynamic panel data models to examine the performance (profitability and asset quality) of a large sample of Canadian banks from 1996Q1 to 2018Q2. Profits, measured as return on assets (ROA), depend on bank factors (capital adequacy, loan loss provisions (LLP) and non-interest income), the slope of the yield curve, and several oil price measures. Our findings suggest that the persistence of profits is estimated to be around 0.40 and the direct impact of oil prices tends to be positive on profits. When oil interacts with non-interest income, there is a strong positive relationship. This can be interpreted as oil price increases leading to more banking transactions (derivatives, fees) and then higher profits. Our evidence also suggests that positive oil price changes increase the asset quality of Canadian banks by reducing the ratio of LLP. Keywords: Bank profits; Dynamic panel data; Loan loss provisions; Oil prices (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:54:y:2020:i:c:s0275531919309638 DOI: 10.1016/j.ribaf.2020.101258 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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