Bank profitability and the business cycle

How does the NBER determine business cycle turning points? Practically speaking, the author suggests that MENA banks should support their capitalisation through adequate regulation programs. The monthly data allow the NBER to be more precise in setting business cycle turning points; the monthly data also typically are not subject to the same magnitude of revisions as are the quarterly GDP data.

Bank profitability and the business cycle

The NBER website http: The German banking system is characterized by high fragmentation, low profitability and low foreign ownership. Main reason for this is its particular structure that can best be described as forced segmentation.

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Please note that corrections may take a couple of weeks to filter through the various RePEc services. Last but not least, the book analyzes political economy implications of banking reforms and provides suggestions on status quo resolution by identifying ways to facilitate reform implementation in the German banking system.

You can help correct errors and omissions. Between trough and peak, the economy is in an expansion. See general information about how to correct material in RePEc.

If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation. They use monthly economic indicators such as employment, real personal income, manufacturing sales, and industrial productionrather than quarterly real Gross Domestic Product GDP.

On the other hand, during prosperous times, banks should reinforce their liquidity position to get additional profits. These results as well as lessons drawn from international reforms suggest that the German banking system could benefit from cross-pillar consolidation which promises to export competition from the national to local banking markets.

The Business Cycle Dating Committee also examines the data to evaluate the depth of a downturn to determine whether it is sufficient to qualify as a recession.

Profitability in Business Cycle Theory and Forecasting

The article provides a review of the process and indicators the NBER Committee uses to evaluate potential business cycle turning points. If you have authored this item and are not yet registered with RePEc, we encourage you to do it here.

Data on these official business cycle turning points and dates are available from the NBER website at http: However, capitalisation and asset quality should be considered attentively during recessions since their implications are more pronounced during those periods. If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item.

This index, published by The Conference Board http: It also allows you to accept potential citations to this item that we are uncertain about.

This structure produces local banking markets. Note that the series typically climbs during expansion periods between the trough and the peak of the business cycle and falls during recessions the shaded areas between the peak and the trough.

With the occurrence of the US crisis, international focus has shifted from finance to financial stability. A recession is a significant decline in activity spread across the economy, that lasts more than a few months and is visible in industrial production, employment, real income, and wholesale-retail sales.

To this aim, they should reduce the proportion of non-performing loans to bank loans that ameliorate the asset quality and ensure greater profits. If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form.

What are business cycles and how do they affect the economy?

How do NBER recessions differ from the common description of a recession as, "a period when real gross domestic product declines for two consecutive quarters? General contact details of provider: Cambridge Scholars Publishing Format Available: During this period, the average business cycle lasted about five years; the average expansion had a duration of a little over four years, while the average recession lasted just under one year.

This book offers an examination of the empirical data of business cycles, the theories that economists have developed to explain them, and major case studies of recessions and depressions both in the United States and internationally.

Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades. More services and features. New approaches to policy-making are also suggested to deal with the three crises that presently buffet the world: Diane Pub Co Format Available: This paper attempts to know how business cycle fluctuations can affect bank profitability in the MENA region, focusing particularly on Jordan, Egypt, Tunisia and Morocco.

May Business cycles are the "ups and downs" in economic activity, defined in terms of periods of expansion or recession.

No. 601 - Bank profitability and the business cycle

The book argues that local bank competition is not as pronounced as national concentration ratios predict and presents a bank pricing study which indicates that local banks, banks located in less densely populated areas and less productive banks tend to charge higher prices for retail bank services than banks that operate nationally.The financial cycle thus appears to predict bank profitability better than the business cycle.

We also show that increases in sovereign risk premia reduce bank profits in a significant way, underscoring the role of credible fiscal frameworks in supporting the overall financial stability. Understanding and monitoring the impact of an unstable economy on the health of the banking industry is a particularly important challenge for bank regulators and policy makers.

This paper attempts to know how business cycle fluctuations can affect bank profitability in the MENA region, focusing particularly on Jordan, Egypt, Tunisia and Morocco.

Bank profitability and the business cycle: evidence from MENA countries

Bank profitability and the business cycle An important element of the macro-prudential analysis is the study of the link between business cycle fluctuations and banking sector profitability and how this link is affected by institutional and structural characteristics.

Given the important connections among profitability, investment, and economic activity, a profitability indicator can be used to assess where the economy is in the business cycle. Rising profitability suggests that the economy is on a secular growth path, while a peak or fall in profitability. The Determinants of Commercial Bank Profitability in Sub-Saharan Africa Prepared by Valentina Flamini, Calvin McDonald, and Liliana Schumacher1 They may ultimately exacerbate business cycle fluctuations due to adverse effects on bank lending capacity.

Using equity returns data over the period –, Allen and Bali () examine the. Bank Ownership and Credit. over the Business Cycle. Is Lending by State Banks Less Procyclical? Bank ownership and credit over the business cycle: Is lending by state banks less procyclical?

1. Ata Can Bertay that state-owned banks report higher loan loss provisioning and achieve lower profitability than private banks using data for a.

Bank profitability and the business cycle
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