Book and Market Values of European Banks: Country, Size, and Business Mix Effects.

In the years since the outbreak of the crisis, the financial markets have persistently reduced the
market value of European banks as a consequence of macroeconomic, regulatory, and structural
factors.
Even though these factors have affected the European banking industry as a whole, the market
valuation of banks have shown differences across country, size, and business mix profiles.
In line with the existing literature on bank market valuation, this study tests for the difference
between the market-to-book ratios of the large European banks using a variety of indicators
typically affecting bank market value.
To verify our research questions, we first regress the market-to-book ratio over performance
measures, risk indicators, and growth patterns. Then, in a second step, we test whether bank
business or country characteristics affect bank market valuation.
Our panel consists of all large publicly traded bank holding companies at the European level. Large
publicly traded banks comprise all listed banks with consolidated assets exceeding 50 billion euro
in 2015.
The results highlight the relevance of the country context for the consequences on bank
performance and stability.