Alvaro G. Taboada
P.O. Box 9580
Mississippi State, MS 39762
Institutional Affiliation: Mississippi State University
NBER Working Papers and Publications
|March 2017||Are Larger Banks Valued More Highly?|
with Bernadette A. Minton, René M. Stulz: w23212
We investigate whether the value of large banks, defined as banks with assets in excess of the Dodd-Frank threshold for enhanced supervision, increases with the size of their assets using Tobin’s q and market-to-book as our valuation measures. Many argue that large banks receive subsidies from the regulatory safety net, so they should be worth more and their valuation should increase with size. Instead, using a variety of approaches, we find (1) no evidence that large banks are valued more highly, (2) strong cross-sectional evidence that the valuation of large banks falls with size, and (3) strong evidence of a within-bank negative relation between valuation and size for large banks from 1987 to 2006 but not when the post-Dodd-Frank period is included in the sample. The negative relation b...