The impact of COVID-19 on the banking sector. Are we heading for the next banking crisis?

Abstract

Purpose

This study aims to examine the effect of the COVID-19 pandemic on the banking sector and to assess if COVID-19 was a trigger for the banking crisis.

Design/methodology/approach

To achieve the main objective, the beta of the banking sector was calculated and analysed. In addition, a fixed panel regression model was applied over the period from the 30th of December 2019 until the 24th of September 2021.

Findings

The results suggest that the pandemic contributed to higher volatility and risk in banking sector but did not confirm a systematic banking crisis.

Originality/value

This paper contributes to the literature by analysing the COVID-19 pandemic as a potential trigger for a banking crisis. This paper also contributed by studying the effects of COVID-19 on the banking sector, especially the risk in the banking sector.

Citation

Tomczak, K. (2023), "The impact of COVID-19 on the banking sector. Are we heading for the next banking crisis?", Qualitative Research in Financial Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/QRFM-09-2021-0157