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Managerial efficiency and failure of U.S. commercial banks during the 2007-2009 financial crisis: was this time different?

Ecos de Economía: A Latin American Journal of Applied Economics

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Title Managerial efficiency and failure of U.S. commercial banks during the 2007-2009 financial crisis: was this time different?
 
Creator Álvarez-Franco, Pilar B.
Restrepo-Tobón, Diego A.
 
Subject Bank Failure, Profit Efficiency, Hazard Models
D40, G21, L13, R32
 
Description 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.
 
Publisher Universidad EAFIT
 
Contributor —
 
Date 2016-12-02
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
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Format application/pdf
text/html
application/xml
 
Identifier http://publicaciones.eafit.edu.co/index.php/ecos-economia/article/view/4180
10.17230/ecos.2016.43.1
 
Source Ecos de Economía: A Latin American Journal of Applied Economics; Vol 20, No 43 (2016)
Ecos de Economía: A Latin American Journal of Applied Economics; Vol 20, No 43 (2016)
2462-8107
1657-4206
 
Language eng
 
Relation http://publicaciones.eafit.edu.co/index.php/ecos-economia/article/view/4180/3435
http://publicaciones.eafit.edu.co/index.php/ecos-economia/article/view/4180/Html
http://publicaciones.eafit.edu.co/index.php/ecos-economia/article/view/4180/Xml
 
Rights Copyright (c) 2016 Pilar B. Álvarez-Franco, Diego A. Restrepo-Tobón