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Why are BHCs organized as parent-subsidiaries? How do they grow in value?

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  • Luciano, Elisa
  • Wihlborg, Clas

Abstract

We rationalize the organization of US banking groups into a holding company with subsidiaries – instead of branches or stand-alone units – subject to regulatory provisions of the ”source-of strength” type. We show that their value increases with debt diversity among affiliates and with complexity, as measured by the number of subsidiaries.

Suggested Citation

  • Luciano, Elisa & Wihlborg, Clas, 2023. "Why are BHCs organized as parent-subsidiaries? How do they grow in value?," Journal of Financial Stability, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:finsta:v:67:y:2023:i:c:s1572308923000554
    DOI: 10.1016/j.jfs.2023.101155
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    References listed on IDEAS

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    2. Kudret Topyan & Chia-Jane Wang & Natalia Boliari & Carlos Elias, 2024. "Credit Risk Management and US Bank-Holding Companies: An Empirical Investigation," JRFM, MDPI, vol. 17(2), pages 1-11, January.

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