Bank Performance around the Introduction of a Section 20 Subsidiary
AbstractAs of 1987, commercial banks in the United States were allowed to establish Section 20 subsidiaries to conduct investment-banking activities. A concern of regulators was that these activities would result in a decrease in performance of commercial banks relative to the risk being undertaken. This paper examines the performance of commercial banks around the establishment of a Section 20 subsidiary. We find that Section 20 activities undertaken by banks result in increased industry-adjusted operating cash flow return on assets, due mainly to revenues from noncommercial-banking activities. Further, risk measures for the sample banks do not change significantly. Copyright The American Finance Association 2002.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by American Finance Association in its journal The Journal of Finance.
Volume (Year): 57 (2002)
Issue (Month): 1 (02)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Omran, Mohammed, 2007. "Privatization, State Ownership, and Bank Performance in Egypt," World Development, Elsevier, vol. 35(4), pages 714-733, April.
- Goddard, John & McKillop, Donal & Wilson, John O.S., 2008. "The diversification and financial performance of US credit unions," Journal of Banking & Finance, Elsevier, vol. 32(9), pages 1836-1849, September.
- Lili Xie, 2007. "Universal Banking, Conflicts of Interest and Firm Growth," Working Papers 200703, Ball State University, Department of Economics, revised Jul 2007.
- Yeager, Timothy J. & Yeager, Fred C. & Harshman, Ellen, 2007. "The Financial Services Modernization Act: Evolution or Revolution?," Journal of Economics and Business, Elsevier, vol. 59(4), pages 313-339.
- George Alessandria & Horag Choi, 2005.
"Do sunk costs of exporting matter for net export dynamics?,"
05-20, Federal Reserve Bank of Philadelphia.
- George Alessandria & Horag Choi, 2007. "Do Sunk Costs of Exporting Matter for Net Export Dynamics?," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 289-336, 02.
- Elijah Brewer, III & William Curt Hunter & William E. Jackson, III, 2004. "Investment opportunity set, product mix, and the relationship between bank CEO compensation and risk-taking," Working Paper 2004-36, Federal Reserve Bank of Atlanta.
- Lóránth, Gyöngyi & Morrison, Alan, 2008. "Bank Diversification and Incentives," CEPR Discussion Papers 7051, C.E.P.R. Discussion Papers.
- W. Scott Frame & Lawrence White, 2002.
"Empirical Studies of Financial Innovation: Lots of Talk, Little Action?,"
02-18, New York University, Leonard N. Stern School of Business, Department of Economics.
- W. Scott Frame & Lawrence J. White, 2004. "Empirical Studies of Financial Innovation: Lots of Talk, Little Action?," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 116-144, March.
- W. Scott Frame & Lawrence J. White, 2002. "Empirical studies of financial innovation: lots of talk, little action?," Working Paper 2002-12, Federal Reserve Bank of Atlanta.
- Stiroh, Kevin J. & Rumble, Adrienne, 2006. "The dark side of diversification: The case of US financial holding companies," Journal of Banking & Finance, Elsevier, vol. 30(8), pages 2131-2161, August.
- Robert DeYoung & Douglas Evanoff & Philip Molyneux, 2009. "Mergers and Acquisitions of Financial Institutions: A Review of the Post-2000 Literature," Journal of Financial Services Research, Springer, vol. 36(2), pages 87-110, December.
- Victoria Geyfman, 2005. "Banks in the securities business: market-based risk implications of section 20 subsidiaries," Working Papers 05-17, Federal Reserve Bank of Philadelphia.
- David E Allen & R.R Boffey & R. J. Powell, 2011. "Survival of the fittest: contagion as a determinant of Canadian and Australian bank risk," Working papers 2011-03, Edith Cowan University, School of Business.
- Focarelli, Dario & Pozzolo, Alberto Franco, 2005. "Conflicts of Interest in Financial Markets - Evidence from Bond Underwriting in the Nineties," Economics & Statistics Discussion Papers esdp05023, University of Molise, Dept. SEGeS.
- Lili Xie, 2007. "Universal Banking, Conflicts of Interest and Firm Growth," Journal of Financial Services Research, Springer, vol. 32(3), pages 177-202, December.
- Timothy J. Yeager & Fred C. Yeager & Ellen Harshman, 2004. "The Financial Modernization Act: evolution or revolution?," Supervisory Policy Analysis Working Papers 2004-05, Federal Reserve Bank of St. Louis.
- Chaplinsky, Susan & Erwin, Gayle R., 2009. "Great expectations: Banks as equity underwriters," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 380-389, February.
- Gleason, Kimberly & McNulty, James E. & Pennathur, Anita K., 2005. "Returns to acquirers of privatizing financial services firms: An international examination," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 2043-2065, August.
- Kevin Stiroh, 2006. "New Evidence on the Determinants of Bank Risk," Journal of Financial Services Research, Springer, vol. 30(3), pages 237-263, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.