Abstract
In recent years, two important literatures on the theory of banking firms have developed. One examines the economic functions of banks in environments in which agents are asymmetrically informed. Another considers the incentive effects (moral hazard) resulting from deposit insurance. Both theories make predictions about the relation between banking firm size and performance. An empirical analysis of large bank holding companies investigates measures of market valuation and risk of failure. Limited support is provided for either set of theoretical predictions.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 47-67 |
| Number of pages | 21 |
| Journal | Journal of Monetary Economics |
| Volume | 31 |
| Issue number | 1 |
| DOIs | |
| State | Published - Feb 1993 |
