Holding company affiliation and bank stability: Evidence from the US banking sector

Radoslav Raykov and Consuelo Silva-Buston

Journal of Corporate Finance, 2020, vol. 65, issue C

Abstract: Is affiliation with a multibank holding company beneficial for bank stability? We revisit this question by examining the response of market-based risk measures of independent and multibank-holding-company banks to an exogenous negative shock (the 2005 US hurricane season). We find evidence consistent with bank holding companies playing an important role in mitigating negative shocks, with affiliates of more liquid holdings remaining more stable in terms of both systemic and individual stability. We also conduct an event study showing that markets perceive multibank-holding-company banks' dynamics after the shock as value-enhancing.

Keywords: Holding company banks; Systemic risk; Financial stability (search for similar items in EconPapers)
JEL-codes: G1 G2 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:65:y:2020:i:c:s0929119920301838

DOI: 10.1016/j.jcorpfin.2020.101739

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