Financial Sector Reform after the Crisis: Has Anything Happened?

46 Pages Posted: 6 Jun 2013

See all articles by Alexander Schäfer

Alexander Schäfer

Johannes Gutenberg University Mainz - Faculty of Law and Economics

Isabel Schnabel

University of Bonn - Institute for Financial Economics and Statistics; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods

Beatrice Weder

University of Mainz - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 24, 2013

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

JEL Classification: G21, G28

Suggested Citation

Schäfer, Alexander and Schnabel, Isabel and Weder di Mauro, Beatrice, Financial Sector Reform after the Crisis: Has Anything Happened? (May 24, 2013). Available at SSRN: https://ssrn.com/abstract=2274044 or http://dx.doi.org/10.2139/ssrn.2274044

Alexander Schäfer

Johannes Gutenberg University Mainz - Faculty of Law and Economics ( email )

Chair of Corporate Finance
D-55099 Mainz, 55128
Germany

Isabel Schnabel (Contact Author)

University of Bonn - Institute for Financial Economics and Statistics ( email )

Adenauerallee 24-42
Bonn, 53113
Germany

HOME PAGE: http://www.finance.uni-bonn.de/schnabel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany
+49-228-9141665 (Phone)
+49-228-9141621 (Fax)

HOME PAGE: http://www.coll.mpg.de/team/page/isabel_schnabel

Beatrice Weder di Mauro

University of Mainz - Department of Economics ( email )

Chair of Corporate Finance
D-55099 Mainz, 55128
Germany
+49 613 1392 0144 (Phone)
+49 613 1392 5053 (Fax)

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