Financial Crisis and Bank Profitability

• This paper examines the impact of the financial crisis on the profitability of Swedish banks. At the beginning of the crisis many banks experienced liquidity problems due to a mismatch in their funding of loans. Aside ordinary savings deposits these banks had for a number of years been financing long-term (mortgage) lending with short-term borrowing on the market. Without resolute interventions by the Government, issuing general banking guarantees, and the Central bank, fuelling the market with liquidity to ever lower interest rates, the financial system might have collapsed totally. This moved the focus from liquidity risk to credit risk. A major concern for bigger commercial banks also operating internationally has been how to manage anticipated and increasingly realized credit losses on the Baltic markets. It seems as their loan loss provisions to a great extent have been covered by greater interest rate margins on the Swedish market. Whether wider margins are motivated by a larger risk exposure of the banks or/ and mainly explained by weaker competition on the financial market is not fully clear. This issue is explored more in depth in this study. Particular emphasis is put on whether there are differences between banks and between different regions (sub-markets). Conducted (econometrical) analyses are based on financial data on an annual but to some extent also a quarterly basis.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Business Administration (hsv//eng)

Nyckelord

Banking

financial crisis

profitability

regulation

risk

Publikations- och innehållstyp

vet (ämneskategori)

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