The Value of Risk: Measuring the Service Output of U.S. Commercial Banks

Susanto Basu, Robert Inklaar and J. Christina Wang

No 14615, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Rather than charging direct fees, banks often charge implicitly for their services via interest spreads. As a result, much of bank output has to be estimated indirectly. In contrast to current statistical practice, dynamic optimizing models of banks argue that compensation for bearing systematic risk is not part of bank output. We apply these models and find that between 1997 and 2007, in the U.S. National Accounts, on average, bank output is overestimated by 21 percent and GDP is overestimated by 0.3 percent. Moreover, compared with current methods, our new estimates imply more plausible estimates of the share of capital in income and the return on fixed capital.

JEL-codes: E01 E44 G21 G32 (search for similar items in EconPapers)
Date: 2008-12
New Economics Papers: this item is included in nep-ban, nep-bec, nep-eff and nep-mac
Note: PR
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Citations: View citations in EconPapers (4)

Published as Susanto Basu & Robert Inklaar & J. Christina Wang, 2011. "The Value Of Risk: Measuring The Service Output Of U.S. Commercial Banks," Economic Inquiry, Western Economic Association International, vol. 49(1), pages 226-245, 01.

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Related works:
Journal Article: THE VALUE OF RISK: MEASURING THE SERVICE OUTPUT OF U.S. COMMERCIAL BANKS (2011)
Working Paper: The value of risk: measuring the service output of U. S. commercial banks (2008)
Working Paper: The Value of Risk: Measuring the Service Output of U.S. Commercial Banks (2008)
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