Economics and Finance Faculty Publications and Presentations

Deposit-Lending Synergies and Bank Profitability

Document Type

Article

Publication Date

10-2018

Abstract

Banks accept deposits and often lend via commitments. It has been shown that there are synergies between transaction deposits and loan commitments; and that the volatility of bank stock returns declines when these two liquidity risks are taken together. We examine whether such deposit-lending synergies reflect on U.S. commercial bank profitability levels, and whether the synergies impact bank profitability levels differently around financial crises. Our results from panel regressions show that the deposit-lending synergies translate to increased profitability only for small publicly traded banks. However, pre-crisis deposit-lending synergies do not appear to lead to higher profitability during or after the crises.

Comments

Original published version available at https://doi.org/10.1007/s12197-017-9414-x

https://rdcu.be/cQE9h

Publication Title

Journal of Economics and Finance

DOI

10.1007/s12197-017-9414-x

Link to Full Text

Share

COinS