An International Comparison of Banks' Equity Returns

This paper tests implications of banking theory and legal theory for cross-country differences in banks' equity betas and returns. Banking theory predicts different risk exposures between transactional banks, found in the United States, United Kingdom, Australia, and Canada, and relationship ba...

Full description

Saved in:
Bibliographic Details
Published in:Journal of money, credit and banking credit and banking, 1998-08, Vol.30 (3), p.472-492
Main Authors: Dewenter, Kathryn L., Hess, Alan C.
Format: Article
Language:English
Subjects:
Analysis
Australia
Bank capital
Bank credit
Bank loans
Bank markets
Bank portfolios
Bank stocks
Banking
Banking industry
Banking system
Banks
Canada
Commercial banks
Comparative analysis
Comparative economics
Cross-national analysis
Economic aspects
Financial systems
Germany
Investment risk
Japan
Netherlands
Profit
Rate of return
Retail banking
Return on investment
Swiss banks
U.S.A
United Kingdom
Citations: Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper tests implications of banking theory and legal theory for cross-country differences in banks' equity betas and returns. Banking theory predicts different risk exposures between transactional banks, found in the United States, United Kingdom, Australia, and Canada, and relationship banks, found in Japan, Germany, Switzerland, and the Netherlands. We find strong empirical support for banking theory's prediction of different risks and returns between transactional and relationship banks. Legal theory predicts that differences in banks' equity risks depend on the nature of the legal system for protecting the interests of outside investors. We find mixed evidence that banks' returns may vary by the type of legal system.
ISSN:0022-2879
1538-4616
DOI:10.2307/2601251