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Abstract

The goal of this paper is to illuminate differences between factors that drive profitability of small and large banks. This research shows that indeed there are notable differences. There are factors that are significant in influencing performance of large banks that do not impact performance of small banks and vice versa. For example, non interest income as a percent of total income is a significant predictor of profitability for large banks but is insignificant in predicting profitability for small banks. These findings are important to investors, bank executives and regulators. The results of this paper can help to better formulate policies and regulations that shape the banking business.

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