UNLV-Econ-WPS-2026-012
Simple Determinants of Commercial Bank Failures
Working paper notice: This paper is a preliminary research output. It has undergone editorial screening but has not undergone external peer review. It may be revised.
Paper record
- Issue
- Spring 2026
- Repository issue
- Volume 3, Issue 2
- Series number
- UNLV-Econ-WPS-2026-012
- Citable publication date
- OAsis online date
- Current version
- Current version ·
- Research field
- Financial Economics
- Pages
- 1-11
Abstract
This study investigates the internal and macroeconomic determinants of commercial banking failures in the United States spanning 1959 to 2025. Using a logit model and a four-quarter lag, two models are estimated: a comprehensive model (1985–2025) and an extended panel model (1960–2025). Empirical results reveal internal CAMELS metrics are primary determinants of survival; profitability and capital adequacy defends against failures, while asset quality deterioration and management inefficiencies accelerates failure. The “too big to fail” paradigm is empirically validated. Contractionary monetary policy and labor market stress increase failure probabilities. Real GDP growth exhibits a role shift predicting commercial bank failures.
Keywords
Bank failure, commercial bank, logistic regression model, logit model, CAMELS, macroeconomic conditions
Version history
- Current version Current