Abstract

http://ssrn.com/abstract=2089750
 


 



The End of Too-Big-to-Fail? Evidence from Senior Bank Bond Yield Spreads Around the Dodd-Frank Act


Bhanu Balasubramanian


University of Akron - College of Business Administration - Department of Finance

Ken B. Cyree


University of Mississippi - School of Business Administration

June 23, 2012


Abstract:     
We examine the secondary market transactions of senior bonds issued by banks for the periods prior to and after passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) in 2010. We find the 136 basis points discount on yield spreads because of the too-big-to-fail (TBTF) effects is removed after the DFA. Markets charge a premium of 33 basis points for the TBTF banks after the DFA. The premium increases further after the rating criteria changes by credit rating agencies. We find the default risk sensitivity of several variables improves and changes in risk are perceptible in the changes in yield spreads.

Number of Pages in PDF File: 48

Keywords: too big to fail, Dodd – Frank Act, Yield spread, Default risk

JEL Classification: G01, G20, G21, G28

working papers series


Download This Paper

Date posted: June 24, 2012 ; Last revised: June 26, 2012

Suggested Citation

Balasubramanian, Bhanu and Cyree, Ken B., The End of Too-Big-to-Fail? Evidence from Senior Bank Bond Yield Spreads Around the Dodd-Frank Act (June 23, 2012). Available at SSRN: http://ssrn.com/abstract=2089750 or http://dx.doi.org/10.2139/ssrn.2089750

Contact Information

Bhanu Balasubramanian (Contact Author)
University of Akron - College of Business Administration - Department of Finance ( email )
259 S. Broadway
Akron, OH 44325
United States
Ken B. Cyree
University of Mississippi - School of Business Administration ( email )
PO Box 3986
Oxford, MS 38677
United States
Feedback to SSRN


Paper statistics
Abstract Views: 936
Downloads: 127
Download Rank: 130,298

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.422 seconds