ASSESSMENT OF US BANKING SECTOR INVESTMENT ATTRACTIVENESS FOR MINORITY INVESTORS: THEORETICAL-APPLIED ASPECT
Abstract. The aim of the work is to prove the appropriateness for minority investors of investing in shares of US banks only with speculative, and not investment intentions; identifying the reasons why long-term investment in the sector is not appropriateness in the presence of a fundamental enabling environment for its development. In the article, the US banking sector is considered as an object of long-term investment for investors who plan to be only minority shareholders, including for citizens of Ukraine. The main research methods in the paper are a graphical analysis of the dynamics of share prices of key US banks and determine the average annual growth rate of the market value of their shares. This average annual growth rate of the value of shares of the respective banks was compared with the dynamics of the stock index S & P-500. The sector is characterized by favorable conditions for development, but the paper proves the hypothesis of the feasibility of investing in shares of US banks only with speculative rather than investment intentions. The factors of inexpediency of long-term investment in this sector in the presence of fundamental favorable conditions for the development of the sector in the country are specified. It is determined that the speculative nature of investments in the US banking sector is due to the lack of sustainable long-term growth of shares of the respective banks at a rate exceeding the growth rate of the stock index S&P-500. The main reasons that hinder the sustainable development of the US banking sector and prevent investment in this sector to outpace the efficiency of investment in the broad market was specified. The main such factors are the significant impact on banking activities of both macroeconomic crises and crises in certain sectors of the economy that are customers of banks. Since the clients of banks are almost all sectors of the economy, the list of possible sectoral crises, which are pass on the banking system in proportion to the volume of lending, is quite significant. This makes investing in the banking sector more risky than investing in other sectors of the economy. The property of the US banking sector and its of state regulation to evolve in the direction of improving the ability to counter economic crises is specified. This property reduces the reliability of forecasts for the development of the studied sector similarly to the dynamics of past periods and forces to plan events in a more optimistic scenario. The heterogeneity of the US banking sector in terms of asset structure and the level of diversification of activities has been identified, which allows individual banks of the country to go through periods of economic crisis in different ways.
Keywords: US banking sector, stocks, S&P stock index-500, investments, economic crises.
JEL Classification G21, G24, G12
Formulas: 2; fig.: 0; tabl.: 2; bibl.: 21.
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Copyright (c) 2021 І. Моргачов, Є. Овчаренко, О. Овєчкіна, В. Тищенко, O. Тищенко
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