Real estate prices and banking performance: evidence from Canada

Robert N. Killins ()
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Robert N. Killins: Seneca College of Applied Arts and Technology

Journal of Economics and Finance, 2020, vol. 44, issue 1, No 4, 78-98

Abstract: Abstract Using quarterly data from 1996 through 2018, this study explores the impact of real estate prices, real estate exuberance and real estate volatility on bank profits using a dynamic panel methodology with a unique sample of Canadian banks. The change in housing prices tends to result in a positive impact on profitability (ROA and ROE), but under risk-adjusted measures of profitability, this positive impact tends to dissipate. When exuberance exists in the real estate market, this also tends to result in a positive impact on non-risk adjusted measures of profitability. Finally, this study finds that the volatility of real estate prices has little impact on the riskiness of banking profits in Canada.

Keywords: Bank profitability; Real estate; Dynamic panel data methodology (search for similar items in EconPapers)
JEL-codes: E44 G21 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s12197-019-09474-8

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