Banks’ Seasoned Equity Offerings Announcements and Central Bank Lending Operations

26 Pages Posted: 29 Aug 2022

See all articles by Massimo Giuliodori

Massimo Giuliodori

University of Amsterdam - Faculty of Economics & Econometrics (FEE); Tinbergen Institute

Jan Kakes

De Nederlandsche Bank - Monetary and Economic Policy Department

Dimitris Mokas

University of Amsterdam

Date Written: August 29, 2022

Abstract

This paper studies the influence of central bank lending operations on the announcement effects of European banks’ seasoned equity offerings (SEOs). We find that larger participation in lending operations is associated with more negative cumulative abnormal returns following the announcement. This result supports the hypothesis that SEOs made by banks that rely more on central bank lending facilities show more negative signaling effects. However, these effects are short-lived and fade away after two trading days following the SEO announcement. Further, we find that offerings motivated by capital strengthening are more likely to signal overpriced equity.

Keywords: Banks; Bank capital; Seasoned equity offerings; Unconventional monetary policy

JEL Classification: E52, E58, G14, G21

Suggested Citation

Giuliodori, Massimo and Kakes, Jan and Mokas, Dimitris, Banks’ Seasoned Equity Offerings Announcements and Central Bank Lending Operations (August 29, 2022). De Nederlandsche Bank Working Paper No. 748, Available at SSRN: https://ssrn.com/abstract=4203636 or http://dx.doi.org/10.2139/ssrn.4203636

Massimo Giuliodori (Contact Author)

University of Amsterdam - Faculty of Economics & Econometrics (FEE) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Jan Kakes

De Nederlandsche Bank - Monetary and Economic Policy Department ( email )

Westeinde 1
1017 ZN Amsterdam
Netherlands

Dimitris Mokas

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

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