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An event study analysis of too-big-to-fail after the Dodd-Frank act: Who is too big to fail?

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  • Allen, Kyle D.
  • Cyree, Ken B.
  • Whitledge, Matthew D.
  • Winters, Drew B.

Abstract

One feature of the Dodd-Frank Act is the elimination of too-big-to-fail (TBTF) banks. TBTF is a government guarantee of large banks that has been shown to increase the value of these banks, so removing the guarantee should result in a price decline of TBTF bank stock. Using event study methods, we find very limited reaction to the process of eliminating TBTF. Specifically, there is limited reaction among the largest banks and banks receiving special attention, such as Systemically Important Financial Institutions (SIFI) banks. Instead, smaller banks not receiving special attention show some evidence of negative returns with the elimination of TBTF.

Suggested Citation

  • Allen, Kyle D. & Cyree, Ken B. & Whitledge, Matthew D. & Winters, Drew B., 2018. "An event study analysis of too-big-to-fail after the Dodd-Frank act: Who is too big to fail?," Journal of Economics and Business, Elsevier, vol. 98(C), pages 19-31.
    • Handle: RePEc:eee:jebusi:v:98:y:2018:i:c:p:19-31
    DOI: 10.1016/j.jeconbus.2018.03.003
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    4. Srinivas Nippani & Ran Ling, 2021. "Bank size and performance: An analysis of the industry in the United States in the post‐financial‐crisis era," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 44(3), pages 587-606, September.

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