Bank Failures: A Study of Georgia Banks

Abstract

Our study considers why a much large proportion of failed U.S. banks, between the years 2007 through 2018, were located in the State of Georgia. Georgia politicians, and certain local bankers, postulated this was due to overzealous regulators. We reviewed various capital ratios and loan risk indicators in the years prior to failure to analyze bank health. Our study found the indicators for bank health in Georgia were significantly worse as compared to the other failed banks. Georgia bank failures were more likely due to undercapitalization, too much loan risk, and insufficient loan loss reserve, rather than overzealous regulators.