An Event Study Analysis of Too-Big-to-Fail after the Dodd-Frank Act: Who is Too Big to Fail?

35 Pages Posted: 25 Oct 2021

See all articles by Kyle Allen

Kyle Allen

Boise State University

Ken B. Cyree

University of Mississippi - School of Business Administration

Matthew D. Whitledge

Independent

Drew B. Winters

Independent

Date Written: September 4, 2018

Abstract

One feature of the Dodd-Frank Act is the elimination of too-big-to-fail (TBTF) banks. TBTF is a government guarantee of large banks that has been shown to increase the value of these banks, so removing the guarantee should result in a price decline of TBTF bank stock. Using event study methods, we find very limited reaction to the process of eliminating TBTF. Specifically, there is limited reaction among the largest banks and banks receiving special attention, such as Systemically Important Financial Institutions (SIFI) banks. Instead, smaller banks not receiving special attention show some evidence of negative returns with the elimination of TBTF.

Keywords: Too-big-to-fail; Dodd-Frank Act; Event study

Suggested Citation

Allen, Kyle and Cyree, Ken B. and Whitledge, Matthew D. and Winters, Drew B., An Event Study Analysis of Too-Big-to-Fail after the Dodd-Frank Act: Who is Too Big to Fail? (September 4, 2018). Available at SSRN: https://ssrn.com/abstract=3942887 or http://dx.doi.org/10.2139/ssrn.3942887

Kyle Allen (Contact Author)

Boise State University ( email )

1910 University Drive
Boise, ID 83716
United States

Ken B. Cyree

University of Mississippi - School of Business Administration ( email )

PO Box 3986
Oxford, MS 38677
United States

Matthew D. Whitledge

Independent

Drew B. Winters

Independent

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