Insider Trading Around Bank Failures

Journal of Commercial Banking and Finance, Vol. 2, pp. 65-80, 2003

18 Pages Posted: 26 Aug 2009 Last revised: 18 May 2011

See all articles by Terrance Jalbert

Terrance Jalbert

University of Hawaii - Department of Business Administration

Ramesh P. Rao

Oklahoma State University - Stillwater - Spears School of Business - Department of Finance

Chenchuramaiah Bathala

Cleveland State University

Alan K. Reichert

Cleveland State University

Date Written: 2003

Abstract

In this paper we examine insider trading around bank failures. We examine insider trading around four major bank failures that took place in the 1980’s. The four failures that are examined are Continental Illinois National Bank and Trust Company, First City Bancorp., First Republic Bank and Mbank. We find that insiders in both the failed bank, as well as non-failed banks, change their trading behavior in the time period surrounding large bank failures. Moreover, we find that insiders in failing banks exhibit different trading patterns than insiders in non-failed banks. We find insiders in the failed bank are larger sellers of their banks stock around the time of the failure than insiders in other banks.

Keywords: Bank Failures, Insider Trading

JEL Classification: G21, G2, G14

Suggested Citation

Jalbert, Terrance and Rao, Ramesh P. and Bathala, Chenchuramaiah and Reichert, Alan K., Insider Trading Around Bank Failures (2003). Journal of Commercial Banking and Finance, Vol. 2, pp. 65-80, 2003 . Available at SSRN: https://ssrn.com/abstract=1461770

Terrance Jalbert (Contact Author)

University of Hawaii - Department of Business Administration ( email )

808-974-7456 (Phone)

Ramesh P. Rao

Oklahoma State University - Stillwater - Spears School of Business - Department of Finance ( email )

Spears School of Business
Stillwater, OK 74078-4011
United States
405-744-1385 (Phone)
405-744-5180 (Fax)

Chenchuramaiah Bathala

Cleveland State University ( email )

Cleveland, OH 44115
United States

Alan K. Reichert

Cleveland State University ( email )

Cleveland, OH 44115
United States

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