In this study we consider the relationship between profitability and market share for 2,438 U.S. bank observations between 2001 and 2008. We examine the relationship between both aggregate market share and the change in market share on measures of bank profitability for large and for community banks. We find that traditional relationships between market share and profitability generally do not hold for either large or community banks during our sample period. There appears to be fewer advantages to large banks making market share gains in terms of subsequent performance. Higher funding costs are negatively related to profitability for community banks but not large banks. Also, a higher proportion of interest income relative to total income is negatively related to profitability for both large and community banks.
|Original language||English (US)|
|Number of pages||17|
|Journal||Banking and Finance Review|
|State||Published - Dec 1 2012|
All Science Journal Classification (ASJC) codes
- Economics and Econometrics