Is There Any Value in the Banks Brand?
- Emanuel Bagna
Traditionally the literature show that public brand value estimates (such as the ones published by Interbrand, Brand Finance or Brand Z), in the context of industrial quoted companies, are incorporated in stock prices, implying that brands significantly contributes to the value generation process in a company. No such study was carried out at the level of the banking sector. This could be due to the attribution of a marginal importance of brands, among other intangible assets, in the banking sector, as highlighted by the literature. In more recent years more and more evidences give evidence of the importance of brands in banking sector; it should be noted that:
- many banks, as a result of the Purchase Price Allocation process - PPA (pursuant to IFRS 3 Business Combinations) consequent to banking aggregations (mergers or acquisitions), have booked in their financial statements (separate or consolidated) brand values;
- reports published by independent parties such as Brand Finance, publishes brand values specifically for the banking sector.
The aim of this article is therefore to assess if the brand contributes to the value generation process in the banking sector. To test our hypothesis we run a regression on a European sample between market capitalization of major banks and their brand value published by independent expert Brand Finance from 2008 to 2017, with a classic value relevance analysis. Our results demonstrate that brand contributes to the value generation process in the banking sector.
Google-Based Impact Factor (2017): 20.47
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