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Is There a Diversification Discount in Financial Conglomerates? / Luc Laeven, Ross Levine.
- Format:
- Book
- Author/Creator:
- Laeven, Luc.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w11499.
- NBER working paper series no. w11499
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2005.
- Summary:
- This paper investigates whether the diversity of activities conducted by financial institutions
- influences their market valuations. We find that there is a diversification discount: The market
- values financial conglomerates that engage in multiple activities, e.g., lending and non-lending
- financial services, lower than if those financial conglomerates were broken into financial
- intermediaries that specialize in the individual activities. While difficult to identify a single causal
- factor, the results are consistent with theories that stress intensified agency problems in
- financial conglomerates that engage in multiple activities and indicate that economies of scope are
- not sufficiently large to produce a diversification premium.
- Notes:
- Print version record
- August 2005.
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