Corporate Assets and Enhancing Firm Value: Evidence from the Market for Bank Branches in the US

This study examines the purchase and sale of US bank branches. Large and unproductive banks with less capital sell branches to smaller and more efficient banks with more capital. I use an event study, and find a significant increase in value for both parties. These valuation effects are driven by slightly better operating performance, faster growth in loans, and a smooth transfer of purchased deposits for buyers and by improved operating performance and no substantial decrease in the growth of loans and deposits for sellers. Overall, the evidence shows that branch dealmakers operate efficiently by reallocating branches to better uses.