Journal article
Bank size and market value: The role of direct monitoring and delegation costs
Journal of banking & finance, v 93, pp 127-138
Aug 2018
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
Recent studies have presented evidence of scale economies for large banks, providing a rationale for some very large banks seen worldwide. In this study, we focus on the negative side of bank size which relates to monitoring costs. In particular, we show that the relationship between size and bank's market to book value of assets is contained by the cost of the manager to directly monitor the borrowers and by the (delegation) cost of the owner to monitor the bank manager. Using a sample of US bank holding companies from 2001 to 2015, we provide evidence that the relationship between size and bank's market to book value of assets is inverse U-shaped and that monitoring costs offset the benefits from economies of scale.
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Details
- Title
- Bank size and market value: The role of direct monitoring and delegation costs
- Creators
- Panagiotis Avramidis - American College of GreeceChristos Cabolis - International Institute for Management DevelopmentKonstantinos Serfes - Drexel University
- Publication Details
- Journal of banking & finance, v 93, pp 127-138
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000442977400009
- Scopus ID
- 2-s2.0-85048806584
- Other Identifier
- 991019168273204721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance
- Economics