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The Paulson Plan: Who Are the Winners?

Eric de Bodt, Frédéric Lobez and Junyao Zhang
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Eric de Bodt: Université Lille Nord de France
Frédéric Lobez: Université Lille Nord de France
Junyao Zhang: Université Lille Nord de France

Bankers, Markets & Investors, 2014, issue 130, 5-22

Abstract: The joint plan by the U.S. Treasury and the Federal Deposit Insurance Corporation (called the Paulson plan), announced on October 13, 2008, represented the largest financial transfer from taxpayers to financial institutions in U.S. history. Existing research has analyzed whether this massive state intervention improved the recipients’ financial health, and thus in this study, we focus on its competitive distortion effects. Our investigation reveals that the Paulson plan was anything but neutral with respect to competition among industry participants. Both short- and long-term results confirm that the winners were the largest banks.

Keywords: TARP; The Paulson plan; Value Effect; Event Study; Distance to Default (search for similar items in EconPapers)
JEL-codes: G2 (search for similar items in EconPapers)
Date: 2014
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