We present a locational model of banking with two types of private banks, honest and opportunistic, and a state bank that is assumed to be less efficient. Opportunistic banks choose whether to honor their contracts with depositors depending on the probability of contract enforcement. We derive three types of equilibria, which depend on institutional quality: a “low” equilibrium in which private...

This paper analyses structural and cyclical determinants of banking profitability in 16 Western European countries. We find that financial structure matters, particularly through the beneficial effect of the capital market orientation in the respective national financial system. Furthermore, higher diversification regarding banks’ income sources shows a positive effect. The industry concentrati...

The present study examines state-level banking-industry specific as well as region economic determinants of non-performing loans for all commercial banks and savings institutions across 50 US states and the District of Columbia for 1984–2013. Using both fixed effects and dynamic-GMM estimations, I find greater capitalization, liquidity risks, poor credit quality, greater cost inefficiency and b...

During 2007-10, failures eliminated 318 U.S. commercial banks and savings institutions, about 4 percent of the total number of banks operating at the end of 2006. The assets and deposits of many failed banks were acquired by institutions that already had offices in markets served by the failed banks. This article investigates the impact of in-market acquisitions of failed banks on the concentra...

This paper reviews the progress of Islamic banking from both theoretical and practical aspects. It highlights the basic principles on which Islamic banking is based and describes the operational details of Islamic banks. It mentions some of the misgivings with respect to the viability of Islamic banking and evaluates them objectively. It highlights the effects of Islamic banking on savings, inv...

This study examines IPO returns for commercial banks and savings banks over the period 1975 to 1994. These financial firms have traditionally been eliminated from IPO studies due to the regulatory nature of the industry. Logue’s (1973) justification for excluding these firms is that they would create a downward bias in any IPO study as a result of the market’s more accurate pricing of these iss...

We present an agent-based model of a minimal economy containing households, retail banks, and producers of consumer and capital goods. Household behavior is based on the buffer-stock savings model by Deaton (1961), while the profit-maximizing firms employ reinforcement learning to determine pricing and production. Competitive retail banks facilitate the flow of funds between households and prod...