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Do Universal Banks Create Value? Universal Bank Affiliation and Company Performance in Belgium, 1905-1909

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Author Info
Van Overfelt W.
Annaert J.
De Ceuster M.
Deloof M.
Abstract

We investigate the impact of universal banks on the performance and the risk of affiliated companies in an unregulated environment with booming financial markets. For a unique sample of 129 Belgian companies listed in the period 1905-1909, we find that universal bank affiliation had a positive impact on the market-to-book ratio and return-on-assets. The effect on performance was positively related to the degree of bank involvement. Universal banks significantly reduced the volatility of return-on-assets. Stock return performance, measured by the Sharpe ratio, was also significantly better for affiliated corporations.

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Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2007001.

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Length: 42 pages
Date of creation: Jan 2007
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Handle: RePEc:ant:wpaper:2007001

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