- Membership in a [diversified] holding company gives a bank access to the parent organization’s capital and liquidity, which allows banks to do more lending, and hold less capital, than unaffiliated banks; however
- Bank holding companies with many subsidiaries are less profitable and have lower q ratios than similar holding companies with fewer subsidiaries.
Monday, March 8, 2010
Why are diversified firms less profitable than single-segment ones?
New research from Peter Klein finds that the "diversification discount" for banks is related to organizational structure. He finds two forces pulling in opposite directions:
Subscribe to:
Post Comments (Atom)
Honestly speaking, I don’t prefer stock trading at all since I consider it way too risky, I am lucky to work with OctaFX broker which is a rocking company with having excellent features which includes low spread of 0.2 pips, high leverage up to 1.500 plus there is also smooth trading platform which further helps in working well especially due to no slippage, delay or any sort of re-quote at all which helps me trade smoothly without any trouble whatsoever.
ReplyDelete