An Analytical Framework of Bank Merger and Reinvestment Decision Under Maximizing Equity Values
29 Pages Posted: 24 Jun 2002
This article evaluates equity value by option pricing model taking a consolidated financial institute as a new portfolio to analyze consolidated situation of risk and equity value. Besides finding how the banks selecting portfolio to maximizing net equity value subject to capital regulation constraint, we also discuss the factors affecting selecting behaviors and the necessary conditions leading to consolidated synergy.
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