Determinants of Asset Value Adjustments: The Case of Germany’s Cooperative Banks

Richard Reichel

Journal of Applied Finance & Banking, 2024, vol. 14, issue 2, 7

Abstract: This paper studies the driving forces behind asset value adjustments in the German cooperative banking sector. Firm-specific as well as macroeconomic factors are considered. We estimate a Vector Error Correction Model for the post-unification period from 1992 to 2022. The main factor behind the improvement in value adjustments is the declining long-term interest rate. Besides these macroeconomic factors, the average bank size and the loans-to-deposits ratio are important. The trend towards larger banks has counteracted the improvement as well as the more loan-oriented business strategy of recent years. Â JEL classification numbers: C580, C58, G21, P13, P34.

Keywords: Cooperative Banks; Asset Value Adjustments; Mergers; Vector Error Correction Model. (search for similar items in EconPapers)
Date: 2024
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