Managerial efficiency and failure of U.S. commercial banks during the 2007-2009 financial crisis: was this time different?
Compared with previous crises few banks failed as a result of the U.S. financial crisis of 2007-2009. We investigate the role played by managerial efficiency in the non-systemic bank failures during the crisis. During previous waves of bank failures, cost-inefficient banks and banks with relatively...
- Autores:
-
Álvarez-Franco, Pilar B.
Restrepo-Tobón, Diego A.
- Tipo de recurso:
- Fecha de publicación:
- 2016
- Institución:
- Universidad EAFIT
- Repositorio:
- Repositorio EAFIT
- Idioma:
- eng
- OAI Identifier:
- oai:repository.eafit.edu.co:10784/11275
- Acceso en línea:
- http://hdl.handle.net/10784/11275
- Palabra clave:
- D40
G21
L13
R32
Bank Failure
Profit Efficiency
Hazard Models
Quiebra de bancos
Crisis Bancaria
Eficiencia
Modelo de Hazard
- Rights
- License
- Copyright (c) 2016 Pilar B. Álvarez-Franco, Diego A. Restrepo-Tobón
| Summary: | Compared with previous crises few banks failed as a result of the U.S. financial crisis of 2007-2009. We investigate the role played by managerial efficiency in the non-systemic bank failures during the crisis. During previous waves of bank failures, cost-inefficient banks and banks with relatively less capital or low-quality assets were more likely to fail. Using data from 2001 to 2010, we show that profit inefficiency—our proxy for managerial inefficiency— is a robust predictor of bank failures while cost inefficiency is unrelated to them. In addition, capital adequacy lost importance in predicting non-systemic bank failures during the crisis while loan quality remained a strong predictor. Our results suggest that profit efficiency can be an important managerial indicator in monitoring banks. |
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