Document Type


Publication Date

January 2012


Finance and Financial Management


In this study I examine the performance and sensitivity of performance to macro factors of banks headquartered in California and banks headquartered in the rest of the states in the Twelfth Federal Reserve District. I find that prior to the financial crisis which started in the fourth quarter of 2007 the non-California banks outperformed California banks; however, towards the end of the financial crisis California banks outperformed non-California banks. I also find higher macro factor sensitivities of non-California banks indicating more macro risk carried by these institutions. The higher risk explains the superior performance in expansions and underperformance in recessions of these banks. This fact suggests that non-California banks in the 12th Federal Reserve District are more nationwide oriented whereas California banks still tend to focus more on the local California economy.


This article originally appeared in Mountain Plains Journal of Business and Economics in Volume 13 and can be found online at this link.