• Login
    View Item 
    •   WU IR Home
    • Colleges, Departments, and Organizations
    • School of Business
    • Kaw Valley Bank Working Paper Series
    • View Item
    •   WU IR Home
    • Colleges, Departments, and Organizations
    • School of Business
    • Kaw Valley Bank Working Paper Series
    • View Item
    JavaScript is disabled for your browser. Some features of this site may not work without it.

    A Tale of Two Banking Systems : The Performanace of U.S. and European Banks in the 21st Century

    Thumbnail
    View/Open
    201.pdf (1.644Mb)
    Author
    Weigand, Robert A.
    Publisher
    Washburn University. School of Business
    Sponsor
    Kaw Valley Bank
    Date
    October 2014
    Metadata
    Show full item record
    Abstract
    I compare the financial performance, growth, asset mix, risk, operational efficiency, profitability and capital holdings of the 20 largest commercial banks in the U.S. and Europe from 2001-2013. U.S. banks earned significantly larger stock returns than their European counterparts in the post-crisis years, accompanied by higher rates of revenue and loan growth, lower risk, and superior profitability and loan quality. European banks, on the other hand, remain trapped in a downward spiral of negative revenue and loan growth, decreasing profitability, increasing impaired and nonperforming loans, and are sporting market value to debt ratios that suggest imminent insolvency. U.S. banks display their own post-crisis irregularities financially and operationally, however, including unusually low loan loss allowances relative to their impaired loans, paying smaller dividends to investors and lower interest to depositors compared with Eurozone banks, and a full 5% decline in their average effective tax rate compared with the pre-crisis period. U.S. banks appear to be just as well-capitalized and hold lower levels of investment and trading assets than European banks, but regulatory loopholes that allow U.S. banks to account for trillions of dollars of risky derivatives positions off-balance sheet render these comparisons less than fully meaningful. Despite unprecedented central bank intervention, the stock returns of both U.S. and European banks have remained significantly related to market and bank-level fundamentals in the years since the financial crisis. Modeling bank returns as a function of their profitability, growth and solvency explains 44% to 60% of the variation in U.S. and European bank stock prices, respectively.
    URI
    https://wuir.washburn.edu/handle/10425/274
    Collections
    • Faculty Papers
    • Kaw Valley Bank Working Paper Series

    Browse

    All of WU IRCommunities & CollectionsBy Submit DateAuthorsTitlesSubjectsThis CollectionBy Submit DateAuthorsTitlesSubjects

    My Account

    LoginRegister

    DSpace software copyright © 2002-2023  DuraSpace
    Contact Us | Send Feedback
    DSpace Express is a service operated by 
    Atmire NV