What factors impact bank performance on the pre, during and post the crisis? System GMM analysis for US-listed banks

Purpose This study examines the determinants and impact of bank-specific, market-specific and macro-specific factors on bank performance before, during and after the global financial crisis in US-listed firms. Design/methodology/approach We use panel data methodology, the ordinary least squares regression model, the dynamic generalized method of moments and Bayesian regression to analyze a sample of 783 listed banks in USA. Findings The findings suggest no significant relationship between firm-specific proxy (such as firm size) and bank performance in both the long-term and crisis periods. Additionally, the results show that market-specific proxy (such as market capitalization) have a statistically significant negative impact on bank profitability (measured by return on assets) during the pre-crisis and post-crisis periods, but a significantly positive impact on profitability (measured by return on equity) in the long-term, post-crisis and Dodd–Frank Act (DFA) era. The evidence suggests that market concentration did not contribute to listed banks' performance during and after the crisis, while it had a significantly positive impact on profitability during the DFA period. Practical implications Overall, the results provide considerable new insights for US banking literature, as the banking industry performance varies in terms of profitability, competitiveness and efficiency. Originality/value This study examines three distinct groups of determinants affecting US banking profitability: bank-specific, market-specific and macro-economic variables.