The Cross Section of Bank Value

We study the determinants of value creation in the cross section of U.S. commercial banks. We develop novel measures of individual bank's productivities at collecting deposits and making loans. We relate these measures to bank market values and find that variation in deposit productivity explains the majority of cross-sectional variation in bank value. We show that variation in productivity is driven by differences across banks in technology, customer demographics, and market power. We also find evidence of synergies between deposit-taking and lending. Our findings suggest that there is significant heterogeneity in banks' abilities to capture value by manufacturing safe assets