An Empirical Multivariate Analysis of the Banking Industry Performance in the UK and the USA in Conditions of the Global Financial Crisis

Abstract

In this Dissertation the empirical results of the multivariate analysis of investigation of the key drivers of Banks performance and comparative analysis of the Banking industry profitability in the UK and the USA in the years preceding, during, and after global financial crisis - from 2005 to 2009 - are presented. The results of this research have been obtained from the application of empirical multivariate econometric model and multiple quantitative analytical approaches to solve complex research objectives. Empirical multivariate analysis has been performed to study the impact of 16 macroeconomic-, financial industry-, market- and Bank-specific determinants on the performance of the randomly selected 210 UK and USA Banks. The research has helped to disclose the main statistically significant determinants of Banks performance in the UK and the USA in years of financial stability and recent crisis. Two research hypotheses have been examined for their credibility and it has been confirmed, that composed empirical multivariate econometric model is valid and adequate, and that financial performance of the UK Banks is different from the performance of the USA Banks, in terms of ROE. The empirical results obtained helped to reveal the similarities as well as variations in Banks performance for two Banking industries and to suggest a new systemic analytical approach for the accessing the Banking system profitability in the UK and the USA.

The findings of this research provide a deeper insight into the Banking industry performance and profitability in two globally recognized financial centres – the UK and the USA - in years before, during and after global financial crisis. This information contributes into revealing the factors determining the financial stability of banks.

Keywords: multivariate econometric model, UK Banks, USA Banks, ANOVA SF test, quartile analysis, percentile analysis

JEL Classification: G01, G21, L25, C01