The Cross Section of Bank Value

Mark Egan, Stefan Lewellen and Adi Sunderam

No 23291, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the determinants of value creation in U.S. commercial banks. We develop novel measures of individual banks’ productivities at collecting deposits and making loans, which we relate to bank market values. We find that deposit productivity is responsible for two-thirds of the value of the median bank and most variation in value across banks. Variation in productivity is driven by differences across banks in technology, customer demographics, and market power. We also find evidence of synergies between deposit-taking and lending. Our findings suggest that there is significant heterogeneity in banks’ abilities to capture value by manufacturing safe assets.

JEL-codes: G2 G21 (search for similar items in EconPapers)
Date: 2017-03
New Economics Papers: this item is included in nep-ban and nep-eff
Note: CF
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Citations: View citations in EconPapers (26)

Published as Mark Egan & Stefan Lewellen & Adi Sunderam & Itay Goldstein, 2022. "The Cross-Section of Bank Value," The Review of Financial Studies, vol 35(5), pages 2101-2143.

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