Loan-Quality Differences: Evidence from Ohio Banks

Bank earnings nationwide, as measuredby return on assets, have beenfalling in the 1980s. Sixteen percent ofthe more than 14,000 commercial banksin the United States ’incurred net lossesin 1985, up fourfold from the 1980 level.Bank loan quality continues to deteriorateand is causing increasing concernamong regulators, investors, andanalysts. Loan charge-offs have morethan doubled in the last four years andhave been a large contributing factor tothe decline in bank earnings.”