Small firm effect: The case for banks

Empirical evidence indicates that common shares of smaller firms earn, on average, higher risk-adjusted returns than larger firms. This is commonly referred to as the "small firm effect" (SFE). Most previous research, however, either excluded banks from the analysis or did not explicitly c...

Full description

Saved in:
Bibliographic Details
Published in:Journal of financial services research 1992-08, Vol.6 (2), p.157-168
Main Authors: Aharony, Joseph, Falk, Haim
Format: Article
Language:English
Subjects:
Banking industry
Comparative analysis
Effects
Return on investment
Small business
Theory
Citations: Items that this one cites
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Empirical evidence indicates that common shares of smaller firms earn, on average, higher risk-adjusted returns than larger firms. This is commonly referred to as the "small firm effect" (SFE). Most previous research, however, either excluded banks from the analysis or did not explicitly consider them. A study aims to fill this gap and contribute to the SFE literature by examining returns on common stocks of 73 banks for the 19 years from 1969-1987. The analysis differs from previous research in this area in both the analytical tool employed and the sampled firms. The findings suggest that the small firm effect is strong, persistent over long investment periods, and monotonically increasing with the increase in firms' size.
ISSN:0920-8550
1573-0735
DOI:10.1007/BF01046628