Big is Not Bad

Posted: 14 Feb 2019

See all articles by Ravi Jain

Ravi Jain

University of Massachusetts Lowell

Dev Prasad

University of Massachusetts Lowell

Rajeeb Poudel

Western Oregon University

Date Written: January 20, 2019

Abstract

Our study is motivated by the continuing criticism of large banks and their role in the 2008 financial crisis. The need for the government to provide bailouts under the “Too Big to Fail” umbrella led to a negative perception associated with the term ‘big.’ This study provides an alternate perspective by examining the relation between stock market returns and asset size of bank holding companies around the crisis caused by the September 11, 2001 terrorist attacks on the World Trade Center in New York. We find evidence that larger banks experienced lower negative returns following the at-tack. This suggests that maybe “big is not bad.” The larger asset size appears to have acted as a cushion in the aftermath of the unexpected sudden shock.

Keywords: banks, asset size, returns, sudden shock, and financial crisis

JEL Classification: G01, G14, G21, G28, G30, G32

Suggested Citation

Jain, Ravi and Prasad, Dev and Poudel, Rajeeb, Big is Not Bad (January 20, 2019). Available at SSRN: https://ssrn.com/abstract=3328134

Ravi Jain

University of Massachusetts Lowell ( email )

Lowell, MA 01854
United States

HOME PAGE: http://www.uml.edu

Dev Prasad

University of Massachusetts Lowell ( email )

1 University Ave
Lowell, MA 01854
United States

Rajeeb Poudel (Contact Author)

Western Oregon University ( email )

Monmouth, OR 97361
United States
97361 (Fax)

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