The determinants of the wealth effects of banks' expanded securities powers

David P. Ely and Kenneth Robinson

No 99-1, Financial Industry Studies Working Paper from Federal Reserve Bank of Dallas

Abstract: After several unsuccessful attempts by Congress to repeal Glass-Steagall restrictions on banks, the Federal Reserve more than doubled the revenue that commercial banking organizations' securities subsidiaries may earn from certain securities activities. The wealth effects associated with this event for a sample of publicly traded banking organizations are examined. We find evidence that indicates the revenue limit resulted in a less-than-optimal mix of activities for securities subsidiaries. However, subsequent merger activity that could have been generated by the revenue increase was not viewed favorably by investors.

Keywords: Securities (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (3)

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