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Auctions of failed banks: an analysis of losing bidders
Review of Quantitative Finance and Accounting, Volume: 61
Swansea University Author: Tim Zhou
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DOI (Published version): 10.1007/s11156-023-01146-3
Abstract
Between 2007 and 2013, the Federal Deposit Insurance Corporation (FDIC) used purchase and assumption (P&A) as a resolution method to auction 492 failed institutions to healthy banks. While existing studies reveal positive value effects on winning bidders of these auctions, this study finds that...
Published in: | Review of Quantitative Finance and Accounting |
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ISSN: | 1573-7179 |
Published: |
Springer Nature
2023
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URI: | https://cronfa.swan.ac.uk/Record/cronfa62940 |
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2025-01-12T15:05:03.3690571 v2 62940 2023-03-16 Auctions of failed banks: an analysis of losing bidders c132216bf49e0544a968bb3919686327 0000-0002-0830-2316 Tim Zhou Tim Zhou true false 2023-03-16 CBAE Between 2007 and 2013, the Federal Deposit Insurance Corporation (FDIC) used purchase and assumption (P&A) as a resolution method to auction 492 failed institutions to healthy banks. While existing studies reveal positive value effects on winning bidders of these auctions, this study finds that losing bidders experience negative abnormal stock returns. Furthermore, the losing bidders’ stockholders react negatively to a worsening market condition and an increased probability of failure. The returns, nevertheless, are related to the market power gains and distorted competitive condition post-auction. These results raise concerns that this type of intervention potentially gives rise to anticompetitive behavior among participating banks of FDIC auctions. Journal Article Review of Quantitative Finance and Accounting 61 Springer Nature 1573-7179 FDIC, Banks, Resolution, Auction 20 3 2023 2023-03-20 10.1007/s11156-023-01146-3 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University SU Library paid the OA fee (TA Institutional Deal) Swansea University 2025-01-12T15:05:03.3690571 2023-03-16T12:56:14.6364155 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Tim Zhou 0000-0002-0830-2316 1 62940__27036__64a845b7fdf44fc489d60cef7740e06a.pdf 62940.VOR.pdf 2023-04-13T14:54:42.3001858 Output 767078 application/pdf Version of Record true Distributed under the terms of a Creative Commons Attribution 4.0 License. true eng https://creativecommons.org/licenses/by/4.0/ |
title |
Auctions of failed banks: an analysis of losing bidders |
spellingShingle |
Auctions of failed banks: an analysis of losing bidders Tim Zhou |
title_short |
Auctions of failed banks: an analysis of losing bidders |
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Auctions of failed banks: an analysis of losing bidders |
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Auctions of failed banks: an analysis of losing bidders |
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Auctions of failed banks: an analysis of losing bidders |
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Auctions of failed banks: an analysis of losing bidders |
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Between 2007 and 2013, the Federal Deposit Insurance Corporation (FDIC) used purchase and assumption (P&A) as a resolution method to auction 492 failed institutions to healthy banks. While existing studies reveal positive value effects on winning bidders of these auctions, this study finds that losing bidders experience negative abnormal stock returns. Furthermore, the losing bidders’ stockholders react negatively to a worsening market condition and an increased probability of failure. The returns, nevertheless, are related to the market power gains and distorted competitive condition post-auction. These results raise concerns that this type of intervention potentially gives rise to anticompetitive behavior among participating banks of FDIC auctions. |
published_date |
2023-03-20T20:20:43Z |
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11.04748 |