Selection in Banking
Nicola Cetorelli () and
No 20191216, Liberty Street Economics from Federal Reserve Bank of New York
Over the past thirty years, more than 2,900 U.S. banks have transformed from pure depository institutions into conglomerates involved in a broad range of business activities. What type of banks choose to become conglomerate organizations? In this post, we document that, from 1986 to 2018, such institutions had, on average, a higher return on equity in the three years prior to their decision to expand, as well as a lower level of risk overall. However, this superior pre-expansion performance diminishes over time, and all but disappears by the end of the 1990s.
Keywords: Banking; Selection; Conglomeration (search for similar items in EconPapers)
JEL-codes: G0 G2 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban
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