Equity Returns in the Banking Sector in the Wake of the Great Recession and the European Sovereign Debt Crisis
22 Pages Posted: 7 Jul 2012 Last revised: 16 Jul 2012
Date Written: July 1, 2012
This study finds that equity returns in the banking sector in the wake of the Great Recession and the European sovereign debt crisis have been driven mainly by weak growth prospects and heightened sovereign risk and to a lesser extent, by deteriorating funding conditions and investor sentiment. While the equity return performance in the banking sector has been dismal in general, better capitalized and less leveraged banks have outperformed their peers, a finding that supports policymakers’ efforts to strengthen bank capitalization.
Keywords: Banks, equity returns, financial crisis, sovereign risk, sovereign debt crisis, economic growth, regulatory capital
JEL Classification: G01, G14, G21
Suggested Citation: Suggested Citation