Reassessment of diversification effects on market values of banks
2020
The effects of income diversification of banks on various risk-adjusted
market value measures are reassessed by applying quantile regressions
on U.S. bank holding company data from 2000–2010. An indirect
effect from a diversified income structure and a direct effect from an
increased non-interest income share jointly determine the net effect of
income diversification. The first main empirical finding shows a
significant discount for the banks in the upper quantiles of the
risk-adjusted market value distributions. Second, the net
diversification effects change over time. These findings are consistent
with the view that the diversification discount reflects an opportunity
cost in adjusting a dynamic value-maximizing strategy
Keywords:
- Correction
- Source
- Cite
- Save
- Machine Reading By IdeaReader
0
References
0
Citations
NaN
KQI