The Cross-Section of Bank Value

Mark Egan, Stefan Lewellen, Adi Sunderam

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

Abstract

We study the determinants of value creation in U.S. commercial banks. We develop novel measures of individual banks' productivities at collecting deposits and making loans that we relate to bank market values. We find that deposit productivity is responsible for two-Thirds of the value of the median bank and most variation in value across banks. Variation in productivity is driven by differences across banks in technology, customer demographics, and market power. We also find evidence of synergies between deposit-Taking and lending. Our findings suggest that there is significant heterogeneity in banks' ability to capture value by manufacturing safe assets.

Original languageEnglish (US)
Pages (from-to)2101-2143
Number of pages43
JournalReview of Financial Studies
Volume35
Issue number5
DOIs
StatePublished - May 1 2022

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

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