Do universal banks create value? Universal bank affiliation and company performance in Belgium, 1905-1909Do universal banks create value? Universal bank affiliation and company performance in Belgium, 1905-1909
Faculty of Applied Economics
Accountancy and Finance
Antwerp :University of Antwerp, Faculty of Applied Economics, 2007[*]2007
Research paper / University of Antwerp, Faculty of Applied Economics , 2007:001
University of Antwerp
We investigate the impact of universal banks on the performance and the risk of affiliated companies in an unregulated environment with booming financial markets. For a unique sample of 129 Belgian companies listed in the period 1905-1909, we find that universal bank affiliation had a positive impact on the market-to-book ratio and return-on-assets. The effect on performance was positively related to the degree of bank involvement. Universal banks significantly reduced the volatility of return-on-assets. Stock return performance, measured by the Sharpe ratio, was also significantly better for affiliated corporations.