The Impact of Global Financial Crisis on Shareholder Value and Operational Efficiency of Banks

This paper investigates whether banks were able to create value for their shareholders after the Global Financial Crisis (GFC) and whether operational efficiency is related to shareholder value creation in informationally efficient stock markets. The impact of GFC on bank efficiency and shareholder value creation is assessed for 29 large banks in the USA, UK, Canada, New Zealand, and Australia during the period 2003-15. These countries are studied as group because of the asymmetrical impact of the GFC on what were otherwise relatively integrated markets. The significant impact of GFC is observed on bank efficiency and shareholder value during 2008-09. A significant relationship between profit efficiency and shareholder value creation is observed. Consistent with prior studies, we did not find a significant relationship between shareholder value and cost efficiency. Important determinants of shareholder value and bank efficiency are also identified, which suggest important policy implications