Is branding creating shareholder wealth for banks?

Abstract

Purpose -The purpose of this article is to analyse, from a shareholder perspective, the link between branding and financial performance. The paper focuses, in the European context, on situations in which shareholder wealth is created or destroyed, and this is measured by using return on assets or market-to-book value as a performance benchmark. Design/methodology/approach -The investigation is designed as a quantitative study and is based on responses obtained from 847 listed banks including 480 located in Europe. There is an analysis of the correlation between branding and shareholder value, by means of regression analysis. Deductions are made for key variables including capital structure, ownership and capital market ratios. Findings -The regression analysis indicates that there are different strategic branding phases and there is correlation between branding and shareholder value. Each phase has its own strategic implications for shareholders, with value either being created or destroyed.Research limitations/implications -The data deal with secondary accounting information submitted in annual reports and are based primarily on European or US-based banks, which mean that the conclusions and generalizations cannot necessarily be applied to other industries, products or on a global scale. Originality/value -This is the most comprehensive quantitative study so far conducted in the field of branding and shareholder value in the banking sector, thus providing unique insight into the strategic branding phases with which banks have to contend. Academics and practitioners, including board members, are offered guidance and a conceptual framework for assessing whether branding activities are generating satisfactory financial results for their investors. Furthermore, it also documents that banks with the right balance between branding and overall operating expenditures can achieve a significantly higher return on assets, which can be a decisive factor in achieving a competitive edge in a crowded and competitive market place.

The impact of knowledge management, learning and socio-cultural factors on innovation

“…Ohnemus conducted a study on optimizing the amount of spending on the brand. Research conducted by this author showed that there is a point of equilibrium determining the optimum size of expenditures on the brand in relation to revenues (Ohnemus, 2009).…”

“…This is due to a number of circumstances, one of which was the realization of the untapped opportunities in this area in response to the emergence of a number of publications in the subject literature presenting brand performance measures (Chernatony et al, 2004) or proving the positive effect achieved by brands on bank performance (Ohnemus, 2009;Root, 2003). For example, one analysis shows that the average value of a bank's brand accounts for some 10% of its market capitalization, while in the case of companies offering durable consumer goods, it is around 35% (Shyder, 2012).…”

Cross-cultural impact on financial companies’ online brand personality

“…Branding is sales-related (Ohnemus, 2009) and plays a substantial role in developing strong brand equity (Song and Sung, 2013). Researchers have explored the effects of brand personality on variables such as consumers’ attitudes, perception of product quality, customer satisfaction and loyalty, purchase intentions, competitive advantage and financial performance (e.g.…”

“…Companies from the financial industry are selected as the research subjects in this study because this sector of industry has experienced an inevitable and dramatic shift with technology innovation and industry deregulation, which have intensified existing market competition (Ohnemus, 2009). After the 2008 global financial crisis and 2009 Eurozone crisis, financial companies become more pressured to build a trustworthy corporate brand both online and offline for risk-averse customers, and to gain long-term competitive advantages (Bravo et al , 2010).…”

Bankahrun, ímynd og traust

“…haft áhrif á tekjur þeirra. Í viðamestu rannsókn sem gerð hefur verið á tengslum ímyndar og arðsemi banka (Ohnemus, 2009) kom síðan í ljós að það var jákvaeð fylgni.…”