Event-Study Evidence of the Value of Relaxing Longstanding Regulatory Restraints on Banks, 1970-2000 / Kenneth A. Carow, Edward J. Kane.

Format:

Book

Author/Creator:

Carow, Kenneth A.

Contributor:

National Bureau of Economic Research.

Kane, Edward J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8594.

NBER working paper series no. w8594

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2001.

Summary:

In a partial-equilibrium model, removing a binding constraint creates value. However, in general equilibrium, the stakes of other parties in maintaining the constraint must be examined. In financial deregulation, the fear is that expanding the scope and geographic reach of very large institutions might unblock opportunities to build market power from informational advantages and size-related safety-net subsidies. This paper reviews and extends event-study evidence about the distribution of the benefits and costs of relaxing longstanding geographic and product-line restrictions on U.S. financial institutions. The evidence indicates that the new financial freedoms may have redistributed rather than created value. Event returns are positive for some sectors of the financial industry and negative for others. Perhaps surprisingly, where customer event returns have been investigated, they prove negative.

Notes:

Print version record

November 2001.