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Banking market reaction to auctions of failed banks

Philip Molyneux, Tim Zhou Orcid Logo

International Journal of Finance & Economics, Volume: 27, Issue: 1, Pages: 518 - 534

Swansea University Author: Tim Zhou Orcid Logo

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DOI (Published version): 10.1002/ijfe.2166

Abstract

In this study, we find that non-merger rival banks of failed banks from 2008 to 2013 experience substantial negative abnormal stock returns in the United States when failed banks are auctioned. Negative abnormal returns are related to contagion effects associated with an increased probability of the...

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Published in: International Journal of Finance & Economics
ISSN: 1076-9307 1099-1158
Published: Wiley 2022
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa54637
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first_indexed 2020-07-03T16:19:31Z
last_indexed 2022-01-22T04:20:12Z
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spelling 2022-01-21T17:21:53.0930275 v2 54637 2020-07-03 Banking market reaction to auctions of failed banks c132216bf49e0544a968bb3919686327 0000-0002-0830-2316 Tim Zhou Tim Zhou true false 2020-07-03 BAF In this study, we find that non-merger rival banks of failed banks from 2008 to 2013 experience substantial negative abnormal stock returns in the United States when failed banks are auctioned. Negative abnormal returns are related to contagion effects associated with an increased probability of their own failure and the information of these rival banks' opaque assets. We also find evidence that FDIC resolutions of these failed banks, similar to previous regulatory interventions, distort the market competition. Journal Article International Journal of Finance & Economics 27 1 518 534 Wiley 1076-9307 1099-1158 auction, banks, FDIC, resolution 1 1 2022 2022-01-01 10.1002/ijfe.2166 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University 2022-01-21T17:21:53.0930275 2020-07-03T16:59:20.1951652 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Philip Molyneux 1 Tim Zhou 0000-0002-0830-2316 2 54637__18001__91a4ae6d019f417eb86d16dca388a599.pdf 54637.pdf 2020-08-20T18:06:45.7576155 Output 1091499 application/pdf Version of Record true Released under the terms of a Creative Commons Attribution License (CC-BY). true eng http://creativecommons.org/licenses/by/4.0/
title Banking market reaction to auctions of failed banks
spellingShingle Banking market reaction to auctions of failed banks
Tim Zhou
title_short Banking market reaction to auctions of failed banks
title_full Banking market reaction to auctions of failed banks
title_fullStr Banking market reaction to auctions of failed banks
title_full_unstemmed Banking market reaction to auctions of failed banks
title_sort Banking market reaction to auctions of failed banks
author_id_str_mv c132216bf49e0544a968bb3919686327
author_id_fullname_str_mv c132216bf49e0544a968bb3919686327_***_Tim Zhou
author Tim Zhou
author2 Philip Molyneux
Tim Zhou
format Journal article
container_title International Journal of Finance & Economics
container_volume 27
container_issue 1
container_start_page 518
publishDate 2022
institution Swansea University
issn 1076-9307
1099-1158
doi_str_mv 10.1002/ijfe.2166
publisher Wiley
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
document_store_str 1
active_str 0
description In this study, we find that non-merger rival banks of failed banks from 2008 to 2013 experience substantial negative abnormal stock returns in the United States when failed banks are auctioned. Negative abnormal returns are related to contagion effects associated with an increased probability of their own failure and the information of these rival banks' opaque assets. We also find evidence that FDIC resolutions of these failed banks, similar to previous regulatory interventions, distort the market competition.
published_date 2022-01-01T04:08:17Z
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score 11.037581

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