This presentation is part of: D00-3 Issues in the Production of Goods and Services

Bank income convergence in the OECD

Angelos A. Antzoulatos, Ph.D.1, Chris Tsoumas, Ph.D.1, and Ekaterini Panopoulou, Ph.D.2. (1) Banking & Financial Management, University of Piraeus, 80 Karaoli & Dimitriou street, Piraeus, 18534, Greece, (2) Statistics & Insurance Science, University of Piraeus, 80 Karaoli & Dimitriou street, Piraeus, 18534, Greece

Abstract.

 

Over the past twenty years or so, the great wave of financial liberalization created severe competitive pressures on both the asset and liability sides of bank balance sheets, world-wide. The banks responded strategically, by shifting away from traditional intermediation activities to trading and fee-earning activities, as well as to securitization. In this paper, we use recent advances in econometrics, and in particular the new panel convergence methodology developed by Phillips and Sul (2007), to explore an issue not explored in the literature so far: Whether the more-or-less common competitive pressures affected similarly the income composition of banks across the OECD countries. Our preliminary results indicate a strong, but not complete yet, convergence in the aforementioned composition.