Size and earnings volatility of US bank holding companies

Jakob de Haan*, Tigran Poghosyan*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

34 Citations (Scopus)

Abstract

We examine whether bank earnings volatility depends on bank size. Using quarterly data for bank holding companies in the United States for the period 1995Q1-2010Q3 and controlling for the quality of management, leverage, and diversification, we find that bank size reduces return volatility. However, the effect is non-linear: when bank size exceeds a certain threshold (about US$5 billion) size is positively related to earnings volatility. The recent financial crisis decreased the threshold beyond which the impact of size on volatility turns positive. (C) 2012 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)3008-3016
Number of pages9
JournalJournal of Banking and Finance
Volume36
Issue number11
DOIs
Publication statusPublished - Nov-2012

Keywords

  • Bank earnings volatility
  • Bank size
  • Financial crises
  • COMMERCIAL-BANKS
  • DIVERSIFICATION
  • RISK
  • PERFORMANCE

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