A Study of Failures in the US Banking Industry

This dissertation studies failures in the U.S. banking industry following the 2008 financial crisis. The dissertation offers an exhaustive review of the organizational failure literature, and changes in the banking industry environment over the past century. It takes three theoretical perspectives - institutional, industrial organization and resource-based view- to analyze failures in the banking industry. The review and analysis allows me to trace the roots of recent bank failures to external (institutional, competitive) and internal (resource structure, strategy, risk) factors, and propose several hypotheses linking such factors with failures. The hypotheses are tested using a data-set that included all bank failures in the US from June 30th, 2009 to June 29 th, 2010. A second data-set that includes all recent bank failures prior to the crisis (2000-2007) is analyzed to compare the antecedents of bank failure prior to-and during- a financial crisis. The results show that both internal and external factors contributed to recent bank failures. This study provides evidence that neither deterministic nor voluntaristic perspective alone explains corporate failures. The combination of multiple theoretical lenses from different perspectives provides the best understanding of failures. The dissertation also discusses theoretical and managerial implications of the study