Impact of the Subprime Crisis on Commercial Banks’ Financial Performance

  • Hao Fang Hwa Hsia Institute of Technology, Department of Assets and Property Management, Taiwan
  • Yang-Cheng Lu Ming Chuan University, Department of Finance, Taiwan
  • Chi-Wei Su Ocean University of China, Department of Finance, Qingdao, Shandong, China

Abstract

We investigated changes in the financial performance of representatives of the world’s top 200 commercial banks after the global subprime financial crisis. Our empirical results show that following the subprime-crisis disclosure, all commercial banks exhibited worse performance in asset quality, profitability, liquidity, and growth index, accompanied by risk increases in asset adequacy, managerial ability, profitability, and growth index. Developed markets have suffered a greater negative influence than emerging markets, causing downward pressure on asset adequacy, asset quality, and profitability since the subprime crisis. Commercial banks within developed nations suffered more direct pronounced effects from the subprime crisis than did those in emerging markets. Our results prove that larger commercial banks, particularly those with larger capitalization, have the economies-of-scale advantage to resist the negative effects of economic downturns.


Key words: Subprime crisis, Financial performance, Commercial banks, CAMELS, Capitalization.
JEL: C23, G21, E02

How to Cite
Fang H., Lu Y., & Su C. (2013). Impact of the Subprime Crisis on Commercial Banks’ Financial Performance. Panoeconomicus, 60(5), 593-614. doi:10.2298/PAN1305593F
Section
Original scientific paper