The conventional wisdom in banking for the past decade or two has been that banks must have as their top priority maximizing shareholder value. While it's difficult to quarrel with that general proposition, something very important is missing from the equation: a time horizon.

Should the management of a bank be charged by the board of directors with maximizing shareholder value in the short term or long term? The time horizon set will likely have a profound impact on the strategies adopted by management.

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