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Are Bank Holding Companies a Source of Strength to Their Banking Subsidiaries?

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  • ADAM B. ASHCRAFT

Abstract

I document evidence that a bank affiliated with a multi-bank holding company (MBHC) is significantly safer than either a stand-alone bank or a bank affiliated with a one-bank holding company. Not only does MBHC affiliation reduce the probability of future financial distress, but distressed affiliated banks are also more likely to receive capital injections, recover more quickly, and are less likely to fail over the next year. Moreover, the measured benefits of affiliation are much larger than those that existed before recent reforms of bank holding company regulation, suggesting that much of the observed benefit can be attributed to regulation and not the market. Copyright (c)2008 The Ohio State University.

Suggested Citation

  • Adam B. Ashcraft, 2008. "Are Bank Holding Companies a Source of Strength to Their Banking Subsidiaries?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(2-3), pages 273-294, March.
  • Handle: RePEc:mcb:jmoncb:v:40:y:2008:i:2-3:p:273-294
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