Credit Market Information Feedback
We examine how a combination of credit market and asset quality information can jointly be used in assessing bank franchise value. We find that expectations of future credit demand and future asset quality explain contemporaneous bank franchise value, indicative of the feedback in credit market information and its consequent impact on bank franchise value.
Balasubramanyan, Lakshmi, Ben R. Craig, James B. Thomson, and Saeed Zaman. 2015. “Credit Market Information Feedback.” Federal Reserve Bank of Cleveland, Working Paper No. 15-15. https://doi.org/10.26509/frbc-wp-201515