IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-04659945.html
   My bibliography  Save this paper

Bank Market Value and Loan Supply

Author

Listed:
  • Mattia Girotti

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Guillaume Horny

    (Centre de recherche de la Banque de France - Banque de France)

Abstract

We study how the misvaluation of banks affects their loan supply by considering proprietary data on 83 banks from 11 euro-area countries from 2010Q1 to 2019Q4. We measure bank market value by the Tobin's Q and identify the impact of nonfundamental changes in bank market value by saturating our specifications with observable bank fundamentals and analyst forecasts on future bank performance as well as several fixed effects. We show that nonfundamental rises in market value lead a bank to increase its loan supply to firms and households, even when the bank's capital structure constraint is not binding. Our findings are consistent with a mechanism in which bank managers cater to the misperceptions of stock market investors.

Suggested Citation

  • Mattia Girotti & Guillaume Horny, 2024. "Bank Market Value and Loan Supply," Post-Print hal-04659945, HAL.
    • Handle: RePEc:hal:journl:hal-04659945
    DOI: 10.1007/s10693-024-00430-0
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-04659945. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.