%0 Journal Article
%T Abnormal Loan Growth and Bank Profitability: Some Evidence from the Recent Crisis | Rossi | International Journal of Business and Management | CCSE
%A Andrea Lippi
%A Mariacristina Piva
%A Mariarosa Borroni
%A Simone Rossi
%J Home | International Journal of Business and Management | CCSE
%D 2019
%R 10.5539/ijbm.v14n7p36
%X During healthy economic/financial times, credit growth often happens without proper provisioning. This is due to a managerial myopia that underestimates the risks underlying an expansive lending policy, leading to lower profitability in following years. However, given the countercyclicality of credit standards, this effect shouldn¡¯t occur during harsh times. In this paper, we analyse the relationship between abnormal credit growth and bank profitability during a crisis period. In particular, we test the hypothesis that during a crisis, abnormal credit growth improves bank profitability, given the need for higher, or at least stable, credit standards. We find support for this assumption using a sample of 101 large European banks observed during the recent crisis period. Results are robust to different robustness checks
%U http://www.ccsenet.org/journal/index.php/ijbm/article/view/0/39725