The effects of income and population demographics on single-county bank performance
Tóm tắt
We investigate the role market demographics play in determining the accounting performance of banks. Specifically, we study the effect of wealth and population to determine if these market factors drive performance, or if performance is related only to bank-specific variables. Using a sample of single-county banks, we find that market demographics play an important role in determining bank performance. Our univariate findings show banks that operate in low population counties outperform those in high population counties. We also show the lowest performing group of banks operates in counties characterized by high population and high income. Our multivariate tests confirm that as county-level population decreases, bank performance increases. Moreover, we observe a significant low-income advantage after controlling for other determinants of profitability. We also find that low population levels significantly mitigate the negative effects of the 2008 financial crisis for small, single-county banks.
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