TAILIEUCHUNG - Are bigger banks more profitable than smaller banks

In this study, we apply Panel Threshold Model (Hansen, 1999) to examine whether there is optimal asset scale for interest spread to affect banks' profits. The empirical results demonstrate the existence of three thresholds, which divide banks into four groups into four groups according to asset scale. When asset scales of banks are in the 3rd capital group, banks profit by the widening in loan-deposit interest spread. For the other three groups, however, the relationship between profit and loan-deposit spread is negative. | Journal of Applied Finance Banking 2011 59-71 ISSN 1792-6580 print version 1792-6599 online International Scientific Press 2011 Are Bigger Banks More Profitable than Smaller Banks Matthew C. Chang1 Chien-Chung Nieh2 and Ya-Hui Peng3 Abstract In this study we apply Panel Threshold Model Hansen 1999 to examine whether there is optimal asset scale for interest spread to affect banks profits. The empirical results demonstrate the existence of three thresholds which divide banks into four groups into four groups according to asset scale. When asset scales of banks are in the 3rd capital group banks profit by the widening in loan-deposit interest spread. For the other three groups however the relationship between profit and loan-deposit spread is negative. Banks return on equity ROE is positively correlated with net commission income net invest income net non-operating income and net interest income. JEL classification numbers G21 G28 Keywords Panel threshold model Interest spread Bank profitability 1 Department of Finance and Banking Hsuan Chuang University No. 48 Hsuan Chuang Rd. Hsinchu 300 Taiwan e-mail a04979@ 2 Department of Banking and Finance Tamkang University No. 151 Ying-chuan Rd. Tamsui District New Taipei City 251 Taiwan. 3 Department of Finance and Banking Hsuan Chuang University No. 48 Hsuan Chuang Rd. Hsinchu 300 Taiwan. Article Info Revised October 14 2011. Published online November 30 2011 60 Are Bigger Banks More Profitable than Smaller Banks 1 Introduction In the 1970s developed countries in the western world started for financial deregulation and most countries follow the trend of financial liberalization. Facing the rapid changes in financial environment Taiwan also deregulated her restrictions on financial institutions and markets. In 2005 there are 44 commercial banks in Taiwan. Under the competitive environment banks tend to narrow down the loan-deposit spread to widen their market shares and it further makes banks less .

• Ngân hàng - Tín dụng
• Panel threshold model
• Interest spread
• Bank profitability
• Are bigger banks
• Profitable than smaller banks
• Loan deposit interest spread
• Economic growth
• Dynamic panel threshold model
• Institutions quality
• Financial development
• Dynamic panel threshold analysis
• Sciences and humanities
• Financial openness
• Dynamic panel analysis
• Total factor productivity
• The agriculture
• Livestock farming
• Fishery industry
• Operational capabilities
• Corporate performance
• Threshold panel model
• Chinese life insurance companies
• Operational factors
• Fixed effect model
• Panel threshold model