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A Peer-reviewed scientific articles/A1 Journal article (refereed), original research
      
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Determinants of Bank Closures: Do Levels or Changes of CAMEL Variables Matter?, Russian Journal of Money and Finance 2 (2018). Mäkinen, Mikko; Solanko, Laura


Category A Peer-reviewed scientific articles
Sub-category A1 Journal article (refereed), original research
auki Internal authors
All authors as text Mäkinen, Mikko; Solanko, Laura 
Number of authors
Status Published
Year of publication 2018 
Date 15.06.2018 
Name of article Determinants of Bank Closures: Do Levels or Changes of CAMEL Variables Matter? 
Name of journal Russian Journal of Money and Finance
Volume of issue 77 
Number of issue
Pages 3-21 
Abstract This study examines the role of levels and changes in bank balance sheet variables in explaining bank closure. Using a unique set of monthly bank-level panel data from Russia, we estimate determinants of bank license withdrawals during 2013M7-2017M7. We make two key findings. First, changes in CAMEL indicators are always significantly correlated with probability of bank closure, and the magnitude of parameter estimates decreases with the lag length. Second, while the one-month lagged levels of capital, earnings, and liquidity are significantly associated with the probability of bank closure in the subsequent month, the level of liquidity is the only significant indicator for longer lags. Our key contribution that changes in CAMEL variables matter more than levels is robust to various robustness checks.
Free text descriptor in Finnish pankit; Venäjä; pankkiala; indikaattorit 
Free text descriptor in English bank closure; bank failure; CAMEL indicators; Russia's banking sector 
JEL-codes G2; G21; G33 
ISSN / e-ISSN 2618-6799 
auki Internet addresses