📄 Research Article
EJAFI Vol. 7, No. 12 (2021)
MACROECONOMIC AGGREGATES AND FINANCIAL SOUNDNESS OF AMERICAN BANKS
Dr. Igbinosa, Sunday Osaretin & Dr. Omoregie Lucky
Department of Banking and Finance, Faculty of Management Sciences, University of Benin, Benin City, Nigeria.
Open Access
Peer Reviewed
Research Article
Abstract
The study examines the impact of macroeconomic aggregates on banks’ financial soundness in the United State of America (US). The precise objectives are to: evaluate the effect of Broad Money Stock on banks financial soundness in America, examine how unemployment rate affects banks financial soundness in America, evaluate the effect of inflation rate on banks’ financial soundness in America and determine the extent to which interest rate affects banks’ financial soundness in America. The study employs secondary data sourced from database of the World Bank. The methods of Data analysis include the co-integration technique as well as the error correction mechanism (ECM) on a time series data for thirty five years period (1985-2019). The results of the study revealed that unemployment rate has positive and significant effect on bank soundness in both the short and long run, while its one year lag has negative but significant effect on bank soundness. Also money supply has positive and statistically significant effect on bank soundness in the short and long run. The one year lag has negative and significant effect on soundness. Similarly, the one year lag of inflation rate has negative but significant effect on bank soundness. The effect of the other macroeconomic variables varied but not statistically significant. The study recommended that for banks in the United State of America to attain the desired level of financial soundness, adequate attention must be paid to macroeconomic aggregates that strongly influence banks soundness such as the unemployment rate, broad money Stock and inflation rate, by regulating the stock of money in the economy, stemming inflation as well as providing employment opportunities for more American men and women that are able and willing to work.
Keywords:
Financial Soundness, Macroeconomic aggregates
📑 How to Cite This Article
APA 7th Edition:
Dr. Igbinosa, Sunday Osaretin, Dr. Omoregie Lucky (2021). MACROECONOMIC AGGREGATES AND FINANCIAL SOUNDNESS OF AMERICAN BANKS. European Journal of Accounting, Finance and Investment, 7(12), 46-61. https://doi.org/
Dr. Igbinosa, Sunday Osaretin, Dr. Omoregie Lucky (2021). MACROECONOMIC AGGREGATES AND FINANCIAL SOUNDNESS OF AMERICAN BANKS. European Journal of Accounting, Finance and Investment, 7(12), 46-61. https://doi.org/
Vancouver Style:
Dr. Igbinosa, Sunday Osaretin, Dr. Omoregie Lucky. MACROECONOMIC AGGREGATES AND FINANCIAL SOUNDNESS OF AMERICAN BANKS. Eur. J. Account. Finance Invest.. 2021;7(12):46-61. DOI:
Dr. Igbinosa, Sunday Osaretin, Dr. Omoregie Lucky. MACROECONOMIC AGGREGATES AND FINANCIAL SOUNDNESS OF AMERICAN BANKS. Eur. J. Account. Finance Invest.. 2021;7(12):46-61. DOI:
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