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JOURNAL OF APPLIED BUSINESS AND ECONOMICS
Bank Profitability: The Impact of Foreign Currency Fluctuations
Author(s): Ling T. He, Alex Fayman, K. Michael Casey
Citation: Ling T. He, Alex Fayman, K. Michael Casey, (2014) "Bank Profitability: The Impact of Foreign Currency Fluctuations," Journal of Applied Business and Economics, Vol. 16, Iss. 2, pp. 98-104
Article Type: Research paper
Publisher: North American Business Press
Abstract:
Given the global nature of business, and in particular banking, we should find that financial institutions
are impacted by foreign currency movements. In this paper, we investigate whether the performance of 22
large U.S. commercial banks is affected by foreign exchange fluctuations over a 40-year period. We find
that these large U.S. banks are exposed to foreign exchange risk and that specific bank performance is
related to the value of the dollar relative to market baskets of other currencies. These results can
potentially be used to mitigate some of this risk and/or alter investment portfolios given various foreign
currency movements.
