Relevance of size in predicting bank failures

Basim Alzugaiby, Jairaj Gupta, Andrew W. Mullineux, Rizwan Ahmed

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    Abstract

    Employing a statistical model-building strategy, this study aims to analyse the United States' bank failures across different size categories (small, medium, and large). Our results suggest that factors associated with bank failures vary across respective size categories, and the average marginal effects (AMEs) of mutually significant covariates also exhibit significant variability across different size classes of banks. The results are robust to up-to 3 years of lagged regression estimates, various control variables, interaction between bank size and bank charter, alternative bank size classifications, and macroeconomic crisis periods.

    Original languageEnglish
    JournalInternational Journal of Finance and Economics
    Early online date21 Jul 2020
    DOIs
    Publication statusE-pub ahead of print - 21 Jul 2020

    Keywords

    • bank failures
    • bank size
    • banking
    • default risk
    • systemic risk

    ASJC Scopus subject areas

    • Accounting
    • Finance
    • Economics and Econometrics

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