Geographic Diversification, Bank Holding Company Value, and Risk

23 Pages Posted: 10 Apr 2011

See all articles by Saiying Deng

Saiying Deng

Southern Illinois University at Carbondale

Elyas Elyasiani

Temple University - Department of Finance

Date Written: Sep 6, 2008

Abstract

We assess the association between geographic diversification and bank holding company (BHC) value and risk, controlling for the distance between the headquarters and branches. The distance-adjusted deposit dispersion index used as a measure of geographic diversification accounts for the number of locations where a BHC operates, the level of activity in each location, and the distance between a BHC and its branches. We find that geographic diversification is associated with BHC value enhancement and risk reduction, increased distance between a BHC and its branches is associated with firm value reduction and risk increase, and geographic diversification across more remote areas is associated with greater value enhancement but smaller risk reduction.

Keywords: bank holding company, geographic diversification, distance

JEL Classification: G21, G28, G34

Suggested Citation

Deng, Saiying and Elyasiani, Elyas, Geographic Diversification, Bank Holding Company Value, and Risk (Sep 6, 2008). Journal of Money, Credit, and Banking, Vol. 40, No. 6, 2008. Available at SSRN: https://ssrn.com/abstract=1804121

Saiying Deng (Contact Author)

Southern Illinois University at Carbondale ( email )

Carbondale, IL
United States

Elyas Elyasiani

Temple University - Department of Finance ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-5881 (Phone)
215-204-5698 (Fax)

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