Do universal banks create value? Universal bank affiliation and company performance in Belgium, 1905-1909
We investigate the impact of universal bank relations on the performance and the risk of listed companies in Belgium in the period 1905-1909. Our results are consistent with the view that universal banks are efficient institutions which overcome problems of asymmetric association inevitably associated with external finance. We find that universal bank affiliation was positively linked with market-to-book ratio and return-on-assets. Performance was also positively related to the degree of bank involvement. Universal bank relations were significant and negatively correlated with volatility of return-on-assets. Finally, stock return performance, measured by the Sharpe ratio, was also significantly better for affiliated corporations.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Caroline Fohlin, 1998.
"Relationship Banking, Liquidity, and Investment in the German Industrialization,"
Journal of Finance,
American Finance Association, vol. 53(5), pages 1737-1758, October.
- Fohlin, Caroline, 1996. "Relationship Banking, Liquidity, and Investment in the German Industrialization," Working Papers 913, California Institute of Technology, Division of the Humanities and Social Sciences.
- Jorion, Philippe, 1991. "Bayesian and CAPM estimators of the means: Implications for portfolio selection," Journal of Banking & Finance, Elsevier, vol. 15(3), pages 717-727, June.
- Enrica Detragiache & Paolo Garella & Luigi Guiso, 2000. "Multiple versus Single Banking Relationships: Theory and Evidence," Journal of Finance, American Finance Association, vol. 55(3), pages 1133-1161, 06.
- Barry Eichengreen & Michael D. Bordo, 2003. "Crises now and then: what lessons from the last era of financial globalization?," Chapters,in: Monetary History, Exchange Rates and Financial Markets, chapter 3 Edward Elgar Publishing.
- Barry Eichengreen & Michael D. Bordo, 2002. "Crises Now and Then: What Lessons from the Last Era of Financial Globalization," NBER Working Papers 8716, National Bureau of Economic Research, Inc.
- Gopalan, Radhakrishnan & Nanda, Vikram & Seru, Amit, 2007. "Affiliated firms and financial support: Evidence from Indian business groups," Journal of Financial Economics, Elsevier, vol. 86(3), pages 759-795, December.
- Enrico C. Perotti, 2005. "Dominant Investors and Strategic Transparency," Journal of Law, Economics and Organization, Oxford University Press, vol. 21(1), pages 76-102, April.
- Perotti, Enrico C & von Thadden, Ernst-Ludwig, 1998. "Dominant Investors and Strategic Transparency," CEPR Discussion Papers 1948, C.E.P.R. Discussion Papers.
- Enrico C. Perotti & Ernst-Ludwig von Thadden, 1999. "Dominant Investors and Strategic Transparency," Working Papers 1999.24, Fondazione Eni Enrico Mattei.
- Marco Becht & Carlos D. Ramírez, 2003. "Does Bank Affiliation Mitigate Liquidity Constraints? Evidence from Germany's Universal Banks in the Pre-World War I Period," Southern Economic Journal, Southern Economic Association, vol. 70(2), pages 254-272, October.
- Marco Becht & Carlos Ramirez, 2003. "Does bank affiliation mitigate liquidity constraints? Evidence from Germany's Universal banks in the pre-World War I period," ULB Institutional Repository 2013/13310, ULB -- Universite Libre de Bruxelles.
- Chirinko, R-S & Elston, J-A, 1997. "Finance, Control, and Profitability : An Evaluation of German Bank Influence," Papers 28, American Institute for Contemporary German Studies-.
- Tarun Khanna & Yishay Yafeh, 2007. "Business Groups in Emerging Markets: Paragons or Parasites?," Journal of Economic Literature, American Economic Association, vol. 45(2), pages 331-372, June.
- Hoshi, Takeo & Kashyap, Anil & Scharfstein, David, 1990. "The role of banks in reducing the costs of financial distress in Japan," Journal of Financial Economics, Elsevier, vol. 27(1), pages 67-88, September.
- Takeo Hoshi & Anil Kashyap & David Scharfstein, 1990. "The Role of Banks in Reducing the Costs of Financial Distress in Japan," NBER Working Papers 3435, National Bureau of Economic Research, Inc.
- Marc Deloof & Wouter Van Overfelt, 2008. "Were Modern Capital Structure Theories Valid in Belgium Before World War I?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(3-4), pages 491-515.
- David E. Weinstein & Yishay Yafeh, 1998. "On the Costs of a Bank-Centered Financial System: Evidence from the Changing Main Bank Relations in Japan," Journal of Finance, American Finance Association, vol. 53(2), pages 635-672, 04.
- George J. Benston, 1994. "Universal Banking," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 121-143, Summer.
- Gorton, Gary & Schmid, Frank A., 2000. "Universal banking and the performance of German firms," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 29-80.
- Gary Gorton & Frank A. Schmid, 1996. "Universal Banking and the Performance of German Firms," NBER Working Papers 5453, National Bureau of Economic Research, Inc.
- Julian Franks & Colin Mayer & Hannes Wagner, 2006. "The Origins of the German Corporation - Finance, Ownership and Control," Review of Finance, European Finance Association, vol. 10(4), pages 537-585, December.
- Nieuwerburgh, Stijn Van & Buelens, Frans & Cuyvers, Ludo, 2006. "Stock market development and economic growth in Belgium," Explorations in Economic History, Elsevier, vol. 43(1), pages 13-38, January.
- Tarun Khanna & Yishay Yafeh, 2005. "Business Groups and Risk Sharing around the World," The Journal of Business, University of Chicago Press, vol. 78(1), pages 301-340, January.
- Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
- Michael P. Murray, 2006. "Avoiding Invalid Instruments and Coping with Weak Instruments," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 111-132, Fall.
- Jobson, J D & Korkie, Bob M, 1981. "Performance Hypothesis Testing with the Sharpe and Treynor Measures," Journal of Finance, American Finance Association, vol. 36(4), pages 889-908, September.
- Boot, Arnoud W. A., 2000. "Relationship Banking: What Do We Know?," Journal of Financial Intermediation, Elsevier, vol. 9(1), pages 7-25, January.
- Cable, John R, 1985. "Capital Market Information and Industrial Performance: The Role of West German Banks," Economic Journal, Royal Economic Society, vol. 95(377), pages 118-132, March. Full references (including those not matched with items on IDEAS)