'Whatever it Takes': An Empirical Assessment of the Value of Policy Actions in Banking
Review of Finance (Forthcoming)
42 Pages Posted: 18 Aug 2016
Date Written: October 1, 2015
Abstract
What types of policy intervention had a greater impact during the financial crisis? By using a detailed dataset of worldwide policy, we answer this question focusing on Globally-Systemically Important banks (G-SIBs), looking both to stock returns and Credit Default Swap (CDS) spreads reactions. As robustness checks, we also analyze a control sample of 31 large Non-Financial Companies (NFCs). Overall, we show that different policy interventions from governments and central banks have produced diverse market reactions: investors generally appreciate monetary policy interventions for G-SIBs (but not for NFCs) and do not welcome bank failures and bailouts (for both G-SIBs and NCFs).
Keywords: Financial crisis; Policy; Event study; Banking
JEL Classification: E52, E58, G14, G21
Suggested Citation: Suggested Citation