An Examination of the Equity Market Response to the Gramm-Leach-Bliley Act Across Commercial Banking, Investment Banking, and Insurance Firms

21 Pages Posted: 7 Dec 2006

See all articles by H. Semih Yildirim

H. Semih Yildirim

York University - Atkinson School of Administrative Studies

Seung-Woog (Austin) Kwag

Utah State University - Department of Business Administration

M. Cary Collins

University of Tennessee, Knoxville - Department of Finance

Abstract

This paper examines the wealth effects of the events surrounding the passage of the Gramm-Leach-Bliley Act of 1999 and changes in systematic risk from the pre-Act period to the post-Act period for commercial banks, investment banks, and insurance firms. The results suggest that investment banks and insurance firms are better positioned to exploit the benefits of product-line diversification opportunities allowed by the legislation compared to commercial banks that experience no significant market reaction. Further evidence indicates a significant risk shift and overall reduction in riskiness for the financial sectors under consideration around the event period.

Suggested Citation

Yildirim, H. Semih and Kwag, Seung-Woog and Collins, M. Cary, An Examination of the Equity Market Response to the Gramm-Leach-Bliley Act Across Commercial Banking, Investment Banking, and Insurance Firms. Journal of Business Finance & Accounting, Vol. 33, No. 9-10, pp. 1629-1649, November/December 2006, Available at SSRN: https://ssrn.com/abstract=950056 or http://dx.doi.org/10.1111/j.1468-5957.2006.00642.x

H. Semih Yildirim (Contact Author)

York University - Atkinson School of Administrative Studies ( email )

218 Atkinson Building
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HOME PAGE: http://www.yorku.ca/yildirim/

Seung-Woog Kwag

Utah State University - Department of Business Administration ( email )

3510 Old Main Hill
Logan, UT 84322
United States
435-797-2361 (Phone)
435-797-2634 (Fax)

M. Cary Collins

University of Tennessee, Knoxville - Department of Finance ( email )

Knoxville, TN 37996
United States

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