Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
986582 | Review of Financial Economics | 2015 | 12 Pages |
Abstract
We examine the relationship between leverage and residual income for a sample of international banks using an unbalanced panel over the period 2005–2011. Our GMM-based econometric model considers both bank-level and country-level variables to control for several other factors aside from equity capital and allows for endogeneity and unobservable heterogeneity. We document a significant positive non-monotonic link between the capital ratio and residual income for the international banking industry. These results are robust to a number of different model specifications.
Related Topics
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Economics and Econometrics
Authors
Andrea Beltratti, Giovanna Paladino,