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Pure contagion effects in international banking: The case of BCCI’s failure

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    Abstract

    We test for pure contagion effects in international banking arising from the failure of the Bank of Credit and Commerce International (BCCI), one of the largest bank failures in the world. We focused on large individual banks in three developed countries where BCCI had established operations, namely the UK, the US, and Canada. Using event study methodology, we tested for contagion effects using time windows surrounding several known BCCI-related announcements. Our analysis provides strong evidence of pure contagion effects in the UK, which have arisen prior to the official closure date. In contrast, there is no evidence of pure contagion effects in the US and Canada.

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    Bibliographic Info

    Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

    Volume (Year): VIII (2005)
    Issue (Month): (May)
    Pages: 101-123

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    Handle: RePEc:cem:jaecon:v:8:y:2005:n:1:p:101-123

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    Related research

    Keywords: bank failures; pure contagion effects; event study methodology; abnormal returns;

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    Cited by:
    1. Stefano Bonini & Diana Boraschi, 2010. "Corporate Scandals and Capital Structure," Journal of Business Ethics, Springer, Springer, vol. 95(2), pages 241-269, September.

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