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Reassessment of diversification effects on market values of banks

Jinyong Kim & Yongsik Kim

Journal of Economic Research2020article
ABDC B
Weight
0.26

Abstract

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.

Cite this paper

@article{jinyong2020,
  title        = {{Reassessment of diversification effects on market values of banks}},
  author       = {Jinyong Kim & Yongsik Kim},
  journal      = {Journal of Economic Research},
  year         = {2020},
}

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Reassessment of diversification effects on market values of banks

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Evidence weight

0.26

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.00 × 0.4 = 0.00
M · momentum0.20 × 0.15 = 0.03
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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