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How are the United States Banks faring during the COVID-19 Pandemic? Evidence of Economic Efficiency Measures

Sakouvogui Kekoura () and Guilavogui Mama Genevieve ()

Open Economics, 2022, vol. 5, issue 1, 11-29

Abstract: Due to the current lockdown and restrictions related to the COVID-19, U.S. commercial and domestic banks are facing cashflow and financial difficulties. This has led to many vulnerable customers losing their source of income. In this paper, we examine the importance of financial liquidity and solvency on U.S. commercial and domestic banks’ efficiency during the COVID-19. This paper adopts the Data Envelopment Analysis’ estimator in a two-step procedure. First, economic efficiency measures of 16,830 December quarterly observations of U.S. commercial and domestic banks are estimated from December 2010 to December 2020. Within each year, 1,530 U.S. commercial and domestic banks are selected. Second, using Tobit and panel fixed effect regression models, the importance of both liquidity and solvency risks on economic efficiency during the COVID-19 is examined. Empirical estimates indicate that both liquidity and solvency financial factors negatively affect the economic efficiency measures of U.S. commercial and domestic banks during the COVID-19.

Keywords: COVID-19; DEA; Liquidity; Solvency (search for similar items in EconPapers)
JEL-codes: C01 C18 C52 Q11 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1515/openec-2022-0117

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