Market Reactions to Resolution Events

Angela Maddaloni and Giulia Scardozzi ()
Additional contact information
Giulia Scardozzi: Roma Tre University

Chapter Chapter 5 in The New Bail-In Legislation, 2022, pp 63-78 from Palgrave Macmillan

Abstract: Abstract The long period (from 2011 to 2019) wherein several instances of bank resolution resulted in bailout or bail-in allows to analyze how financial markets reacted. Using this relatively long time span and the different resolution events, a comparison of market reactions can be made according to the type of the event (e.g. bailout and bail-in) and the uncertainty surrounding its implementation. We analyzed the abnormal stock prices returns through event studies. The analysis shows a negative impact on the stock price returns following resolution cases regardless of the resolution mechanism implemented. The financial market reacts negatively when the resolution is undertaken within a bailout framework, but the reaction is smaller in absolute value when compared with bail-in resolution cases. However, after the formal approval of the bail-in regulation, investors began to react less negatively to bail-in resolution cases than to bailouts.

Keywords: Abnormal returns; Bail-in; Bailout; CAR; Bank resolution (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

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:pal:pmschp:978-3-030-87560-2_5

Ordering information: This item can be ordered from
http://www.palgrave.com/9783030875602

DOI: 10.1007/978-3-030-87560-2_5

Access Statistics for this chapter

More chapters in Palgrave Macmillan Studies in Banking and Financial Institutions from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().