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Vertical Integration and Bank Performance

  • Tom Gellrich
  • Andreas Hackethal
  • Markus Holzhäuser
Conference paper

Abstract

This paper examines vertical integration and its impact on profitability and shareholder value in the global banking industry. We derive a measure for vertical integration using a sample of 859 banks from 9 Anglo-Saxon and European countries covering the timeframe 1997–2002. Our results suggest that banks either operating on highly integrated or highly disintegrated levels of vertical integration display superior performance figures and stock market evaluations. Additionally, vertically integrated banks show lower levels of firm risk. As our results suggest an interrelation between vertical integration and outsourcing, banks need clear determined strategies whether to engage into outsourcing activities or not.

Keywords

Vertical Integration Bank Performance Outsourcing 

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Copyright information

© Physica-Verlag Heidelberg 2005

Authors and Affiliations

  • Tom Gellrich
    • 1
  • Andreas Hackethal
    • 1
  • Markus Holzhäuser
    • 1
  1. 1.Johann Wolfgang Goethe UniversityGermany

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