Should I Stay or Should I Go? Bank CEOs and the choice to opt-out of the Temporary Liquidity Guarantee Program

38 Pages Posted: 26 Nov 2020 Last revised: 21 Dec 2021

Date Written: September 7, 2020

Abstract

Extant finance research shows that personal and professional characteristics of CEOs influence decision-making, though banks are commonly excluded. We address this gap and investigate bank CEOs’ decisions on the Transaction Account Guarantee (TAG) Program and the Debt Guarantee Program (DGP), two government stimulus programs from the Great Recession. Adding tension to current CEO literature, bank CEOs behave differently and thus, policymakers do not have to contest with CEO characteristics concerning participation in stimulus. Additionally, the relationships between banks and bank holding companies (BHCs) is remarkably underexplored. We contribute to this area with a novel finding that individual banks held by BHCs tend to make uniform decisions across the BHC.

Keywords: Deposit Insurance, Behavioral Finance, Financial Crisis, CEO, Bailouts, Temporary Liquidity Guarantee Program

JEL Classification: G20, G40, G38, G32, G01

Suggested Citation

Stone, Anna-Leigh and Faulkner, Matthew, Should I Stay or Should I Go? Bank CEOs and the choice to opt-out of the Temporary Liquidity Guarantee Program (September 7, 2020). Available at SSRN: https://ssrn.com/abstract=3707244 or http://dx.doi.org/10.2139/ssrn.3707244

Anna-Leigh Stone

Samford University ( email )

800 Lakeshore Drive
Birmingham, AL 35229
United States

Matthew Faulkner (Contact Author)

San Jose State University ( email )

United States

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