Banks and Financial Crises: Market Valuation of the Nobel Prize in Economic Science 2022

Ben Bernanke, Douglas Diamond, and Philip Dybvig received the 2022 Nobel Memorial Prize in Economic Sciences for their work in preventing bank collapses. We investigate the cumulative abnormal stock returns of US and European banks around the announcement, analyzing shareholder wealth impact. We find a significant positive wealth effect. The positive effect is particularly pronounced for US banks, riskier banks, and those with higher charter values—banks more likely to receive bailouts. Our findings suggest bank shareholders believe they will benefit from the economists' advocacy for public bailouts of distressed banks.

Keywords: Nobel Prize in Economic Science, bank bailouts, event study, bank risk, charter value

Suggested Citation: Suggested Citation

Fernandez, Carlos and González, Víctor M. and Pathan, Shams, Banks and Financial Crises: Market Valuation of the Nobel Prize in Economic Science 2022. Available at SSRN: https://ssrn.com/abstract=4877990 or http://dx.doi.org/10.2139/ssrn.4877990