The aim of this chapter is to investigate the main value creation drivers in European banks. We start by identifying three business models using balance-sheet characteristics of a large sample of European banks. We then seek to analyse the most important accounting profit and capital absorption drivers. In particular for retail- funded banks we try to assess the impact of loan-loss provisioning (LLP) together with a wide array of credit-risk exposure on value creation measured by EVA. We also endogenise the effect of growth opportunities. Our results suggest that provisioning policies are positively and significantly related to EVA through the impact on asset returns volatility and equity betas. We also account for a relation between betas and growth opportunities.

Floreani, J., Polato, M., Paltrinieri, A., Pichler, F., Value Creation Drivers in European Banks: Does the Capital Structure Matter?, in Santiago Carbó Valverde, P. J. C. S. F. R. F. (ed.), Liquidity Risk, Efficiency and New Bank Business Models, Palgrave Macmillan, London 2017: 241- 272 [http://hdl.handle.net/10807/177794]

Value Creation Drivers in European Banks: Does the Capital Structure Matter?

Paltrinieri, Andrea
Writing – Original Draft Preparation
;
2017

Abstract

The aim of this chapter is to investigate the main value creation drivers in European banks. We start by identifying three business models using balance-sheet characteristics of a large sample of European banks. We then seek to analyse the most important accounting profit and capital absorption drivers. In particular for retail- funded banks we try to assess the impact of loan-loss provisioning (LLP) together with a wide array of credit-risk exposure on value creation measured by EVA. We also endogenise the effect of growth opportunities. Our results suggest that provisioning policies are positively and significantly related to EVA through the impact on asset returns volatility and equity betas. We also account for a relation between betas and growth opportunities.
2017
Inglese
Liquidity Risk, Efficiency and New Bank Business Models
978-3-319-30819-7
Palgrave Macmillan
Floreani, J., Polato, M., Paltrinieri, A., Pichler, F., Value Creation Drivers in European Banks: Does the Capital Structure Matter?, in Santiago Carbó Valverde, P. J. C. S. F. R. F. (ed.), Liquidity Risk, Efficiency and New Bank Business Models, Palgrave Macmillan, London 2017: 241- 272 [http://hdl.handle.net/10807/177794]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10807/177794
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