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RESEARCH PRODUCT
Revisiting bank failure in the United States: a fuzzy-set analysis
Francisco ClimentAlexandre MomparlerPedro Carmonasubject
Economics and Econometricsfood and beveragesFinancial systembank failurebank failure preventionlcsh:Regional economics. Space in economicsBanking industrylcsh:HD72-88lcsh:HT388fuzzy-set qualitative comparative analysis (fsqca)lcsh:Economic growth development planningFuzzy set analysisBank failure; bank failure prevention; bank financial distress; fuzzy-set qualitative comparative analysis (fsQCAFinancial distressBusinessBank failurebank financial distressdescription
Past financial crises have illustrated the importance of recognising the combinations of factors that can cause financial distress in the banking industry. Accordingly, this study uses fuzzy-set qualitative comparative analysis (fsQCA) to identify the combinations of factors that lead to bank failure. The data consist of 30 annual financial ratio series for 156 U.S. banks over a 15-year period (2001–2015). Identifying combinations of conditions that can produce bank failure is crucial to help regulators and bank managers. The fsQCA presented in this paper sheds light on the relationships between combinations of conditions and bank failure, providing a solution comprising two sufficient and disjunctive sets of conditions that lead to bank failure. This solution includes financial indicators of performance, asset quality, efficiency and capitalisation. The robustness of the two sets of conditions is assessed using several tests.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2020-01-01 | Ekonomska Istraživanja |