TY  - JOUR
AU  - Basu,Susanto
AU  - Inklaar,Robert
AU  - Wang,J. Christina
TI  - The Value of Risk: Measuring the Service Output of U.S. Commercial Banks
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14615
PY  - 2008
Y2  - December 2008
UR  - http://www.nber.org/papers/w14615
L1  - http://www.nber.org/papers/w14615.pdf
N1  - Author contact info:
Susanto Basu
Department of Economics
Boston College
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617/552-2182
Fax: 617/552-2308
E-Mail: susanto.basu@bc.edu

Robert Inklaar
University of Groningen
Faculty of Economics
PO Box 800
9700 AV Groningen
The Netherlands
E-Mail: R.C.Inklaar@rug.nl

J. Christina Wang
Federal Reserve Bank of Boston
Research Dept, T-8
600 Atlantic Avenue
Boston, Massachusetts 02210
E-Mail: Christina.Wang@bos.frb.org
AB  - Rather than charging direct fees, banks often charge implicitly for their services via interest spreads. As a result, much of bank output has to be estimated indirectly. In contrast to current statistical practice, dynamic optimizing models of banks argue that compensation for bearing systematic risk is not part of bank output. We apply these models and find that between 1997 and 2007, in the U.S. National Accounts, on average, bank output is overestimated by 21 percent and GDP is overestimated by 0.3 percent. Moreover, compared with current methods, our new estimates imply more plausible estimates of the share of capital in income and the return on fixed capital.
ER  -