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. © 2023, Emerald Publishing Limited.