| Article ID: | iaor2016919 |
| Volume: | 39 |
| Issue: | 1 |
| Start Page Number: | 35 |
| End Page Number: | 62 |
| Publication Date: | Mar 2016 |
| Journal: | Journal of Financial Research |
| Authors: | Salotti Valentina, Schenck Natalya A, Thornton John H |
| Keywords: | investment, finance & banking |
The real estate bubble and 2007–2009 financial crisis revived the debate about the viability of the thrift charter and its imposed limits on lending diversification. We compare the impact of real estate exposure on franchise values of publicly traded thrifts and size‐matched banks during and after the crisis. Whereas thrifts are mostly exposed to residential real estate, banks have a higher concentration in commercial real estate (CRE), which is significantly associated with the decline in their franchise values. We conclude that the constraints on loan portfolio diversification, such as the one on CRE, are not detrimental to the thrift charter.