The Effects of Selected Determinants on The Performance of Banks: Evidence from Developed Market Economies from 1984 to 2018

Abstract

The research aims to examine factors influencing the performance of banks in EMEs by placing focus on the USA’s banking sector performance. The study also seeks to establish ways and policies which can be used to enhance developed markets economies’ banking sector performance together with their financial and economic growth and development. Expectations are that this will enhance knowledge and understanding regarding significant variables influencing the financial development of developed market economies. The data was analyzed using an Auto Regressive Distributed Lag Models that was estimated using aggregate data of 1 372 banks insured by the FDIC from 1984 to 2018 using EViews 9.5. The results showed that bank capital and bank size have positive effects on bank performance. It was revealed that inflation and a financial crisis have adverse effects on bank performance. The research’s practical implications caution banks in the USA to continue working towards improving their asset management strategies to enhance their performance levels.