[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-321892-105":59,"doc-detail-321892-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","economic-commentary-the-general-motivationfor-divestiture","Economic Commentary - The General MotivationFor Divestiture","","Analyzes voluntary divestitures by bank holding companies, focusing on why nonbanking assets were sold in the late 1970s and early 1980s and what economic pressures shaped these decisions. Reviews shifting macroeconomic, technological, and regulatory conditions that increased risk in banking while management sought cash, diversification, and better risk-return trade-offs. Highlights that prior empirical evidence found limited profitability and weak diversification benefits from nonbanking subsidiaries, motivating reallocation of assets.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/economic-commentary-the-general-motivationfor-divestiture/321892/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/economic-commentary-the-general-motivationfor-divestiture/321892.png","ImageObject",300,407,{"name":92,"@type":93},"Asher","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-04","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",14,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What does voluntary divestiture mean in this context?","Question",{"text":113,"@type":114},"It refers to selling off or spinning off one or more operating subsidiaries. The document distinguishes sell-offs (selling assets for cash and/or securities) from spin-offs (distributing subsidiary shares to existing shareholders).","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"Why did bank holding companies consider selling nonbanking assets?",{"text":118,"@type":114},"The document links divestiture to changes in the operating environment—macroeconomic, technological, or regulatory—that led management to reassess risk and returns. It also notes motives such as raising cash, meeting debt obligations, and addressing problems in other subsidiaries.",{"name":120,"@type":111,"acceptedAnswer":121},"What do the cited studies suggest about the performance of nonbanking subsidiaries?",{"text":122,"@type":114},"The evidence indicates that nonbanking subsidiaries were often not particularly profitable compared with banks or similar independent competitors. It also reports that nonbanking activities tended to be riskier than banking, with positive correlations limiting diversification benefits.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},321892,1790479582,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},687197207639,"https://ap-avatar.wpscdn.com/davatar_a8503ba1806abce46bf441b54a3ca4cd","ECONOMICCOMMENTARY  \nIn the late 1970s and early 1980s anincreasing number of nonfinancial cor-porations decided to alter their assetportfolios through voluntary divest-iture—that is,by selling off or spinningoff one or more of their operating sub-sidiaries.The motives and financialimpacts of this activity have beenexamined in several recent studies.  \nA striking trend is becoming evidentin banking.A considerable number ofbank holding companies(BHCs)havesold or are considering the sale of vary-ing amounts of the assets of one ormore of their nonbanking subsidiaries.Holding company sales of bankingassets(i.e.the sale of entire banks)remain infrequent at present but maysoon become more common as well.2Voluntary divestitures by bank holdingcompanies were relatively rare prior tothe late 1970s.Nonbank asset sales areoccurring at a time when the risk/return tradeoff in banking appears tobe worsening and as existing barriersto BHC entry into additional non-banking activities are being hotlydebated.It is also interesting to notethat the divested assets are being pur-chased by other bank holding compan-ies as well as by other types of financialand nonfinancial firms.  \nThe implications of this activity re-main unexplored.In this study,volun-tary sell-offs of nonbanking assets bybank holding companies that havetaken place over the past decade will beexamined.3  \nGary Whalen is an economist with the FederalReserre Bank of Clereland.The author zeould liketo thank James Balazsy for his assistance.  \nThe eiezes expressed herein are those of theauthor and not necessarily those of the FederalReserte Bank of Clereland or of the Board ofGorernors of the Federal Reserve System.  \n# The General MotivationFor Divestiture\n\nVoluntary asset sales suggest that oneor more actual or anticipated changesin the selling firm's operating environ-ment has or is expected to occur,caus-ing management to reassess the risksand returns of the assets presentlyincluded and excluded from the firm'sportfolio.These changes could bemacroeconomic,technological or regu-latory in nature.Divestiture allows theselling company,even one unable orunwilling to borrow funds in the creditmarkets,to raise cash to invest inexisting or new activities(withexpected return/risk trade-offs superiorto those associated with the assetssold),to meet existing contractual debtobligations,to offset temporary operat-ing problems at other subsidiaries,or toaccomplish some other short-run orlong-run objective.  \n# Possible Reasons ForNonbank Divestiture By BHCs\n\nBank holding companies aggressivelyentered a variety of nonbanking fieldsin the early 70s.There were several rea-sons for this activity.One was the expec-tation that they could earn returns high-er than those attainable in commercial  \n1.There are two types of divestitures,sell-offsand spin-offs.In a sell-off divestiture,assets aresold to another firm usually in exchange for cashand/or securities.In a spin-off divestiture,sharesof a subsidiary are distributed to existing shareholders of the parent corporation.Voluntary spin-offs by BHCs are rare (only one could be identified),and so are not examined.  \nBank Holding  \nCompany VoluntaryNonbanking AssetDivestitures  \nby Gary Whalen  \nbanking.The other motive was a desireto diversify.Presumably,the returnsearned in these activities would not bemuch more variable than,and imperfect-ly correlated with,the returns earnedby banking subsidiaries,thus affordingholding companies the opportunity to re-duce the variability of the overall re-turns of the consolidated organization.  \nIn general,however,empirical stu-dies of the nonbanking operations ofbank holding companies indicate thatrelatively few companies have realizedsignificant benefits from these activi-ties.'In particular,the studies suggestthat the nonbanking subsidiaries ofbank holding companies have not beenparticularly profitable,relative tobanks or to similar independent com-petitors.Indeed,evidence reported in1984 indicates that the nonb","cbCaihihJ6Gx6m3B","https://ap.wps.com/l/cbCaihihJ6Gx6m3B","pdf",1362973,"English","# The General MotivationFor Divestiture\n# Possible Reasons ForNonbank Divestiture By BHCs","[{\"question\":\"What does voluntary divestiture mean in this context?\",\"answer\":\"It refers to selling off or spinning off one or more operating subsidiaries. The document distinguishes sell-offs (selling assets for cash and/or securities) from spin-offs (distributing subsidiary shares to existing shareholders).\"},{\"question\":\"Why did bank holding companies consider selling nonbanking assets?\",\"answer\":\"The document links divestiture to changes in the operating environment—macroeconomic, technological, or regulatory—that led management to reassess risk and returns. It also notes motives such as raising cash, meeting debt obligations, and addressing problems in other subsidiaries.\"},{\"question\":\"What do the cited studies suggest about the performance of nonbanking subsidiaries?\",\"answer\":\"The evidence indicates that nonbanking subsidiaries were often not particularly profitable compared with banks or similar independent competitors. It also reports that nonbanking activities tended to be riskier than banking, with positive correlations limiting diversification benefits.\"}]","Economic Commentary - The General MotivationFor Divestiture | PDF",1789960502,13]