Determinants of the Rate of Return on Commercial Bank Assets in the United States, 1959-1998

This exploratory note empirically investigates determinants of the annual percentage rate of return on commercial bank assets over the period 1959-1998. The findings indicate that this rate of return has been an increasing function of the average annual interest rate yield on three-year U.S. Treasury notes and the Federal Deposit Insurance Corporation Improvement Act of 1991 and a decreasing function of inflation, the percentage unemployment rate, and the increased competition that began in the 1980’s.