Journal of Financial Services Research

, Volume 56, Issue 1, pp 39–71 | Cite as

Publicly Traded Versus Privately Held Commercial Banks: Sensitivity to Growth Opportunities

  • Robert DeYoungEmail author
  • Lei Li


We test whether and to what extent listed U.S. commercial banks have been able to take advantage of their access to public capital markets to respond more efficiently to new growth opportunities. We examine over 100,000 quarterly observations of publicly traded and privately held U.S. commercial banking companies between 1984 and 2012. Identification is gained via instrumental variables estimation and by exploiting the natural exogeneity of growth opportunities in the commercial banking industry. We find that publicly traded banks are substantially more responsive to new growth opportunities than private banks, and that this superior investment responsiveness exists in both the organic and external (M&A) growth channels.


Commercial banks Growth Public capital markets Investment sensitivity 



We benefited greatly from the insights of an anonymous journal referee. We thank seminar participants at the Banque de France, DePaul University, the Federal Deposit Insurance Corporation, the Financial Management Association, Florida Atlantic University, Florida International University, the International Finance and Banking Society, the University of Kansas, the University of Limoges, Louisiana State University, the Southern Finance Association, and William & Mary University for their comments and suggestions.

The views and opinions expressed in this paper are not necessarily those of the Board of Governors or of the Federal Reserve System.


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© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.University of KansasLawrenceUSA
  2. 2.Board of Governors of the Federal Reserve SystemWashingtonUSA

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