Until the 1970s, both banks and nonfinancial corporations relied on performance targets linked to their earnings per share (EPS). Over the next few decades, banks rapidly changed to emphasize return on equity (ROE) as a performance target. Investors seem aware of this change because ROE growth (EPS growth) better explains banks’ (nonfinancials’) stock market values. Also, manager compensation linked to ROE is more common for banks than for nonfinancials. This paper presents a model of a bank subject to fixed-rate deposit insurance and facing increasing competition that erodes its charter value. When the bank chooses its capital to maximize its shareholder value, its performance based on ROE appears better than its performance based on EPS. Thus, the increase in competition that started in the 1970s, along with fixed-rate deposit insurance, may explain banks’ growing preference for ROE over EPS as a performance target.

直到1970年代，银行和非金融公司都依靠与其每股收益（EPS）相关的绩效目标。在接下来的几十年中，银行迅速转变为以股本回报率（ROE）为绩效目标。投资者似乎意识到了这一变化，因为ROE增长（EPS增长）可以更好地解释银行（非金融类））股票市场价值。同样，与ROE挂钩的经理薪酬在银行中比在非金融行业中更为普遍。本文提出了一种银行模型，该模型要服从固定利率存款保险，并且面临着日益加剧的竞争，从而侵蚀了其宪章价值。当银行选择其资本以最大化其股东价值时，其基于ROE的表现似乎要优于其基于EPS的表现。因此，自1970年代开始的竞争加剧，加上固定利率存款保险，可能解释了银行越来越倾向于将ROE优先于EPS作为业绩目标。