Breach of Trust: Bank Valuation after the banking crisis
aswathdamodaran.substack.com
Until the banking crisis of 2008, investors had made a Faustian bargain, when it came to valuing and investing in banks. Banks were opaque in their public disclosures and investors often had little information on either the risk of the securities held or the default probabilities of loan portfolios. However, investors were willing to accept this opacity and view banks as "safe" investments for two reasons:
Breach of Trust: Bank Valuation after the banking crisis
Breach of Trust: Bank Valuation after the…
Breach of Trust: Bank Valuation after the banking crisis
Until the banking crisis of 2008, investors had made a Faustian bargain, when it came to valuing and investing in banks. Banks were opaque in their public disclosures and investors often had little information on either the risk of the securities held or the default probabilities of loan portfolios. However, investors were willing to accept this opacity and view banks as "safe" investments for two reasons: