Shareholder Value in Banking

This text provides a detailed analytical assessment of shareholder value creation in banking. It explains what shareholder value creation is and its main drivers. Various shareholder value measures in banking are compared with conventional and other performance indicators. We empirically examine the drivers of shareholder value in banking and illustrate empirical relationships between factors that are believed to add to the wealth of bank owners. The first part of the text provides a framework for analysing shareholder value theory by discussing how shareholder value can be defined, if it can be considered a valid strategic objective for banks, how shareholder value can be measured and how it can be created. The second part of the text present various empirical investigations in to order to measure shareholder value (using the Economic Value Added approach) and some of its drivers (such as cost and profit efficiency, productivity changes and customer satisfaction). The final part analyses the importance of these drivers in creating shareholder value and also briefly develops a new measure of bank efficiency (shareholder value efficiency).