The return to retail and the performance of U.S. banks
AbstractThe U.S. banking industry is experiencing a renewed focus on retail banking, a trend often attributed to the stability and profitability of retail activities. This paper examines the impact of banks' retail intensity on performance from 1997 to 2004 by developing three complementary definitions of retail intensity (retail loan share, retail deposit share, and branches per dollar of assets) and comparing these measures with both equity market and accounting measures of performance. We find that an increased focus on retail banking across U.S. banks is linked to significantly lower equity market and accounting returns for all banks but lower volatility for only the largest banking companies. We conclude that retail banking may be a relatively stable activity, but it is also a low-return one.
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Bibliographic InfoPaper provided by Federal Reserve Bank of New York in its series Staff Reports with number 233.
Date of creation: 2005
Date of revision:
Other versions of this item:
- Hirtle, Beverly J. & Stiroh, Kevin J., 2007. "The return to retail and the performance of US banks," Journal of Banking & Finance, Elsevier, vol. 31(4), pages 1101-1133, April.
- NEP-ALL-2006-01-01 (All new papers)
- NEP-BEC-2006-01-01 (Business Economics)
- NEP-FMK-2006-01-01 (Financial Markets)
- NEP-MKT-2006-01-01 (Marketing)
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