The Cross Section of Bank Value

59 Pages Posted: 5 Apr 2017

See all articles by Mark Egan

Mark Egan

Harvard Business School; National Bureau of Economic Research (NBER)

Stefan Lewellen

Pennsylvania State University; London Business School

Aditya Sunderam

Harvard University

Multiple version iconThere are 2 versions of this paper

Date Written: March 2017


We study the determinants of value creation within U.S. commercial banks. We focus on three theoretically-motivated drivers of bank value: screening and monitoring, "safe" deposit production, and synergies between deposit-taking and lending. To assess the relative contributions of each, we develop novel measures of banks' deposit productivity and asset productivity and use these measures to evaluate the cross-section of bank value. We find that variation in deposit productivity explains the majority of variation in bank value, consistent with theories emphasizing safe-asset production. We also find evidence of meaningful value creation from synergies between deposit-taking and lending. Overall, our findings suggest that banks are primarily "special" due to their unique liability structure rather than their ability to screen and monitor borrowers.

Suggested Citation

Egan, Mark and Lewellen, Stefan and Sunderam, Aditya, The Cross Section of Bank Value (March 2017). NBER Working Paper No. w23291. Available at SSRN:

Mark Egan (Contact Author)

Harvard Business School ( email )

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National Bureau of Economic Research (NBER) ( email )

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Stefan Lewellen

Pennsylvania State University ( email )

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United States

London Business School ( email )

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London, London NW1 4SA
United Kingdom

Aditya Sunderam

Harvard University ( email )

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