valuation

Bank Diversification and Valuation: International Evidence

Using a panel of the largest 800 banks from 31 OECD countries between 1998-2012 we investigate whether the diversity of financial institutions affects their valuations. That is whether banks with more diversified operations trade at a premium (reduce risk) or discount (are too complex). We look at both asset diversity and income diversity and price to book and Tobin's q as measures of value. Looking at the whole set we find that it is difficult to empirically verify the role of bank diversity on bank valuations.