The Effects of Financial Market Deregulation on Bank Risk and Profitability

Ian R Harper and T Scheit

Australian Economic Papers, 1992, vol. 31, issue 59, 260-71

Abstract: Financial market deregulation was expected to increase the riskiness of banks and to reduce their risk-adjusted profitability. In particular, it was expected that returns to bank equity would fall as bank charter values eroded in the face of competition from newly-established banks. This paper employs standard techniques to examine the behavior of bank risk and profitability prior to and since the deregulation of financial markets in Australia. The results indicate that the systematic risk of banks has not been affected by deregulation. Moreover, the data do not support the view that Australian banks were earning excess returns relative to those predicted by the Capital Asset Pricing Model prior to deregulation or that they are now. Copyright 1992 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia

Date: 1992
References: Add references at CitEc
Citations: View citations in EconPapers (12)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:31:y:1992:i:59:p:260-71

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0004-900X

Access Statistics for this article

Australian Economic Papers is currently edited by Daniel Leonard

More articles in Australian Economic Papers from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().