Beta convergence and sigma convergence of key financial ratios post the Great Recession: community banks vs. non-community banks

Su-Jane Chen ()
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Su-Jane Chen: Metropolitan State University of Denver

Economics Bulletin, 2023, vol. 43, issue 2, 922 - 933

Abstract: This study investigates whether there is a convergence in key U.S. bank financial ratios for the period of 2010-2017, the immediate aftermath of the Great Recession. It reveals both beta and sigma convergences and suggests a progression of bank profitability, capital sufficiency, and liquidity towards a common level and a reduction of cross-sectional dispersion over time. This research also examines the convergence speed of two bank groups, community banks and non-community banks, given their drastically different business models, geographical coverage, and size. The test results show that community banks in general adjust at a slower speed than non-community banks.

Keywords: Community banks; Non-Community banks; Beta convergence; Sigma convergence; Great Recession (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2023-06-30
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