Bank Survival Around the World A Meta‐Analytic Review

Evžen Kočenda and Ichiro Iwasaki

No 2021-02, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: Bank survival is essential to economic growth and development because banks mediate the financing of the economy. A bank’s overall condition is often assessed by a supervisory rating system called CAMELS, an acronym for the components Capital adequacy, Asset quality, Management quality, Earnings, Liquidity, and Sensitivity to market risk. Estimates of the impact of CAMELS components on bank survival vary widely. We perform a meta-synthesis and meta-regression analysis (MRA) using 2120 estimates collected from 50 studies. In the MRA, we account for uncertainty in moderator selection by employing Bayesian model averaging. The results of the synthesis indicate an economically negligible impact of CAMELS variables on bank survival; in addition, the effect of bank-specific, (macro)economic, and market factors is virtually absent. The results of the heterogeneity analysis and publication bias analysis are consistent in terms that they do not find an economically significant impact of the CAMELS variables. Moreover, best practice estimates show a small economic impact of CAMELS components and no impact of other factors. The study concludes that caution should be exercised when using CAMELS rating to predict bank survival or failure.

Keywords: bank survival; bank failure; CAMELS; meta-analysis; publication selection bias (search for similar items in EconPapers)
JEL-codes: C12 D22 G21 G33 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2021-06
New Economics Papers: this item is included in nep-cfn and nep-cwa
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Citations: View citations in EconPapers (4)

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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/71926/wp2021-02.pdf

Related works:
Journal Article: Bank survival around the world: A meta‐analytic review (2022)
Working Paper: Bank Survival Around the World: A Meta-Analytic Review (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2021-02

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