Title: To what extent the global financial crisis deteriorated loan quality of US commercial banks?

Authors: Ameni Tarchouna; Bilel Jarraya; Abdelfettah Bouri

Addresses: Research Laboratory Governance, Finance and Accounting, Faculty of Economics and Management, Sfax University, Tunisia ' Department of Accounting, College of Business and Economics, Qassim University, Saudi Arabia; Research Laboratory Governance, Finance and Accounting, Faculty of Economics and Management, Sfax University, Tunisia ' Faculty of Economics and Management, Sfax University, Tunisia

Abstract: This paper aims to study the extent to which the global financial crisis worsened the loan quality of US commercial banks. That is, we specify the factors behind non-performing loans with a focus on the effect of the crisis as an additional determinant. Thus, we use dynamic panel GMM estimation on three size groups of 184 US commercial banks over 2000-2013 period. Our findings show that bad loans in the three sub-samples are differently affected by the bank-specific and macroeconomic variables. Moreover, our results indicate that the crisis factor has a positive and statistically significant effect on non-performing loans of US banks with small ones being mostly influenced. This finding can be clarified by the policies of financial intervention that favoured larger banks so as to save the US financial system. Also, the diversification of large banks enables them to overcome the contagious crisis effect.

Keywords: loan quality; global financial crisis; dynamic panel GMM estimation; US commercial banks.

DOI: 10.1504/IJMED.2019.097801

International Journal of Management and Enterprise Development, 2019 Vol.18 No.1/2, pp.63 - 84

Available online: 06 Feb 2019 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article