The impact of expected regulatory changes: The case of banks following the 2016U.S. election

Britta Hachenberg, Florian Kiesel, Sascha Kolaric and Dirk Schiereck

Finance Research Letters, 2017, vol. 22, issue C, 268-273

Abstract: We analyze bank stocks and credit default swap (CDS) spreads around the U.S. presidential election on November 8, 2016. We find a strong rally in bank stocks combined with an overall widening in bank CDS spreads during the days after the announcement of the election result. Following Donald Trump's victory, market participants appear to anticipate a lowering of financial sector regulation, particularly with respect to the Dodd-Frank act. In addition, we find that Global Systemically Important Banks (G-SIBs) reacted more positive than non-G-SIBs, with stocks having larger gains and CDS remaining relatively stable. Non-G-SIB stocks, on the other hand, gained less and their CDS widened, indicating less favorable changes from deregulation than for G-SIBs.

Keywords: U.S. election; Banks; Credit default swap; Stock markets; Market regulation; Dodd-Frank act (search for similar items in EconPapers)
JEL-codes: G14 G15 G21 H77 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:22:y:2017:i:c:p:268-273

DOI: 10.1016/j.frl.2016.12.021

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