The Effect of Fdicia Regulation on Bank Holding Companies

Carow, Kenneth A.; Larsen, Glen A.

doi:10.1111/j.1475-6803.1997.tb00242.x

Cited by 13 publications

(5 citation statements)

References 13 publications

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“…Carow and Larsen () examine the stock market impact of the U.S. Federal Deposit Insurance Corporation Improvement Act, which is intended to improve the credibility of the banking system. Contrary to expectations, the stock market showed abnormal negative returns on most of the event dates due to the increased regulatory burdens resulting from the Act.…”

Section: Literature Reviewmentioning

confidence: 99%

“…There is a vast literature of that nature, which includes Carow and Larsen (1997), Erickson and Maydew (1998), Bittlingmayer and Hazlett (2000), Chen and Schoderbek (2000), Edwards et al (2004), Ali and Kallapur (2001), Navissi et al (2005), Lee and Park (2007), and Armstrong et al (2010), just to name a few recent studies. Carow and Larsen (1997) examine the stock market impact of the U.S. Federal Deposit Insurance Corporation Improvement Act, which is intended to improve the credibility of the banking system. Contrary to expectations, the stock market showed abnormal negative returns on most of the event dates due to the increased regulatory burdens resulting from the Act.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Specifically, our study tests for the impacts by measuring the stock market reactions employing a typical event‐study methodology. There is a vast literature of that nature, which includes Carow and Larsen (), Erickson and Maydew (), Bittlingmayer and Hazlett (), Chen and Schoderbek (), Edwards et al. (), Ali and Kallapur (), Navissi et al.…”

Section: Literature Reviewmentioning

confidence: 99%

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Stock Market Response to the Financial Regulations in the Mortgage‐Lending Market in Korea

Jung

Park

2016

Financ Manag Account

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This study investigates the economic impact of the financial regulations that aimed to control the housing market in Korea during the reign of late President Ro's Administration, which had diligently fought against the then speculative bubble in the Korean real‐estate market. We test for the validity of the general prediction that the financial regulations in the form of the loan‐to‐value (LTV) and debt‐to‐income (DTI) restrictions would have adverse impacts on the value of the firms operating in the mortgage‐lending industry. In this event study, we select two critical days as event dates and check whether the stock prices of the financial firms react negatively to the announcements of the regulations. Overall, the initial imposition of the DTI restrictions (i.e., the first event) adversely affects those banks that possess a relatively large number of mortgage loans in their asset portfolio. By contrast, banks that hold a small number of mortgage loans appear to benefit from the risk‐reducing effect of the DTI regulation. Subsequently, the reinforcement of the LTV and DTI rules (i.e., the second event) has negative impacts on the banks with large mortgage loans. The degree of this adverse effect is greater in the second event than in the first event (i.e., the DTI restrictions). The reinforced regulations also unfavorably affect the savings banks with large mortgage loans but to a lesser degree compared with their counterparts in the banks. Meanwhile, the reinforcement of the financial regulations has negligible impacts on the banks and the savings banks with smaller mortgage loans.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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Stock Market Response to the Financial Regulations in the Mortgage‐Lending Market in Korea

Jung

Park

2016

Financ Manag Account

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“…Our approach is in conformity with the practice of other researchers in the economics and finance areas where they do not use a control sample in studies that examine the stock market effects of regulations. Some examples include Fraser et al (1997) on the wealth effects of interstate branching regulation, Gupta (1997) on the value of regulatory seal of approval, Carow and Larsen (1997) on the effect of Federal Deposit Insurance Corporation Improvement Act regulation on bank holding companies, and Madura et al (1993) on market reaction to the thrift bailout, etc. We use "Eventus w " software and Center for Research in Security Prices data from Wharton Research Data Services for analysis.…”

Section: Ijphm 33mentioning

confidence: 99%

Wealth effects of the pharmaceutical industry‐physician interaction compliance guidelines on large pharmaceutical companies

Jambulingam

Sharma²,

Ghani³

2009

International Journal of Pharmaceutical and Healthcare Marketing

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Purpose -The purpose of this paper is to investigate the wealth effects of the issuance of guidelines by the Office of Inspector General (OIG) to encourage pharmaceutical manufacturers to use internal controls or self-regulation "to efficiently monitor adherence to applicable statutes, regulations, and program requirements" in their marketing to the physicians. Design/methodology/approach -The authors employ a standard event-study methodology to examine the impact on shareholders of 12 large pharmaceutical firms around four events leading up to the final guidance issued by the OIG. Findings -The overall results indicate a net wealth loss for the sample firms. Research limitations/implications -Interpretation of results warrants caution since the sample is biased toward large multinational pharmaceutical firms that are listed on the USA stock exchanges. The issuance of high-level government policy initiative triggers a pharmaceutical industry response that in turn mitigated firms' questionable marketing practices. The government accomplishes this without instituting regulation but by taking the dialogue to a wide-ranging and highly public forum. Originality/value -The empirical results suggest that a public policy initiative that impacts shareholder wealth could alter firm (industry) behavior thereby sparing government from enacting regulation and potentially saving exorbitant regulatory enactment, enforcement, and policing costs. The results also provide credence to the argument that the hybrid systems, ones that combine industry rule making with government oversight, provide the greatest potential for overall benefits to society.

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“…Our approach is in conformity with the practice of other researchers in the economics and finance areas, in which they do not use a control sample in studies that examine the stock market effects of regulations. Recent examples include Fraser and colleagues' (1997) work on the wealth effects of interstate branching regulation; Gupta's (1997) on the value of regulatory seal of approval; Carow and Larsen's (1997) on the effect of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) regulation on bank holding companies; and Madura, Tucker, and Zarruk's (1993) on market reaction to the thrift bailout.…”

Section: The Market Modelmentioning

confidence: 99%

Wealth Effects of the Passage of the Nutrition Labeling and Education Act of 1990 for Large U.S. Multinational Food Corporations

Ghani

Childs

1999

Journal of Public Policy & Marketing

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In this article, the authors investigate the wealth effects of the passage of the food labeling regulation issued by the United States Nutritional Labeling and Education Act for a sample of large U.S. multinational food corporations using a standard event study methodology. The results show an adverse impact on shareholders’ wealth around the Act's passage dates. The evidence is of significant value to policymakers and market participants as additional food labeling-related legislation is contemplated.

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The Effect of Fdicia Regulation on Bank Holding Companies

Cited by 13 publications

References 13 publications

Stock Market Response to the Financial Regulations in the Mortgage‐Lending Market in Korea

Stock Market Response to the Financial Regulations in the Mortgage‐Lending Market in Korea

Wealth effects of the pharmaceutical industry‐physician interaction compliance guidelines on large pharmaceutical companies

Wealth Effects of the Passage of the Nutrition Labeling and Education Act of 1990 for Large U.S. Multinational Food Corporations

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