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Stock Market Responses to Bank Restructuring Policies
| Citations: | 8 - 2 self |
BibTeX
@MISC{East_stockmarket,
author = {During The East and Daniela Klingebiel and Randy Kroszner and Luc Laeven and Pieter Van Oijen},
title = {Stock Market Responses to Bank Restructuring Policies},
year = {}
}
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Abstract
This paper studies the effects of financial restructuring announcements on short-term stock returns of banks and non-financial companies during the East Asian crisis. We find that the prices of bank stocks respond positively to announcements relating to government guarantees of bank liabilities. Non-financial companies increase in value upon the announcement of guarantees but announcements that favor the use of public funds for liquidity and capital support for banks negatively affect their stock prices. These results suggest that announcements of deposit guarantees may provide comfort to market participants during a crisis of confidence, but that the provision of public funds for bank bail-outs were not necessarily viewed as credible means to restore the health of the financial sector.
Keyphrases
stock market response bank restructuring policy non-financial company public fund short-term stock return market participant capital support bank bail-outs financial restructuring announcement stock price east asian crisis financial sector government guarantee bank liability paper study bank stock credible mean deposit guarantee
