The stock market impact of government interventions on financial services industry groups: Evidence from the 2007–2009 crisis

Anita Pennathur, Deborah Smith and Vijaya Subrahmanyam

Journal of Economics and Business, 2014, vol. 71, issue C, 22-44

Abstract: We examine the market reaction and shift in risk from nine prominent government interventions in response to the crisis between February 2007 and July 2009 on four types of institutions: banks, savings and loan associations (S&Ls), insurance companies, and real estate investment trusts (REITs). Overall, with the exception of the Troubled Assets Repurchase Program (TARP), the interventions were wealth-decreasing and risk-increasing events for financial institutions. Leveraged firms and firms with higher trading volumes earn significantly lower abnormal returns. For both during- and post-crisis periods, larger firms experience increases in systematic risk; non-U.S. firms experience lower changes in systematic risk.

Keywords: Financial crisis; Banking; REITs; Systematic risk; Regulation; Financial services (search for similar items in EconPapers)
JEL-codes: G01 G20 G21 G22 G28 K20 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:71:y:2014:i:c:p:22-44

DOI: 10.1016/j.jeconbus.2013.08.002

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