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Financial Sector Reform After the Crisis: Has Anything Happened?

Alexander Schaefer (), Isabel Schnabel () and Beatrice Weder di Mauro
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Alexander Schaefer: hair of International Macroeconomics, Johannes Gutenberg-Universitaet Mainz, Germany

No 1304, Working Papers from Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz

Abstract: We analyze the reaction of stock returns and CDS spreads of banks from Europe and the United States to four major regulatory reforms in the aftermath of the subprime crisis, employing an event study analysis. In contrast to the public perception that nothing has happened, we find that financial markets indeed reacted to the structural reforms enacted at the national level. All reforms succeeded in reducing bail-out expectations, especially for systemic banks. However, banks’ profitability was also affected, showing up in lower equity returns. The strongest effects were found for the Dodd-Frank Act (especially the Volcker rule), whereas market reactions to the German restructuring law were small.

Keywords: Financial sector reform; financial stability; Dodd-Frank Act; Volcker rule; Vickers reform; German restructuring law; Swiss too-big-to-fail regulation; event study (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2013-05-24, Revised 2013-05-24
New Economics Papers: this item is included in nep-ban
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https://download.uni-mainz.de/RePEc/pdf/Discussion_Paper_1304.pdf First version, 2013 (application/pdf)

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