Bank holding company expansion: a refocus on its financial rationale

Bank holding company expansion: a refocus on its financial rationale

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Article ID: iaor201522717
Volume: 6
Issue: 1
Start Page Number: 67
End Page Number: 81
Publication Date: Mar 1983
Journal: Journal of Financial Research
Authors: ,
Keywords: finance & banking, management
Abstract:

This paper addresses managerial motivation, stockholder motivation, organizational effects of affiliation, and the proper analytical approach to study bank holding companies. A consolidated entity viewpoint is employed. A valuation model is developed and empirically implemented in which important factors such as intra‐organizational effects, service fees, expanded debt capacity, and equity adjustments are considered. These factors have been ignored by conventional studies. In addition, this study's methodology extends considerably that of the prior studies incorporating a consolidated entity valuation approach. A valuation model, despite its requirements for highly specific empirical data, is generally superior over univariate, multivariate, and market models in assessing BHC performance.

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