The impact of Japan's financial stabilization laws on bank equity values
AbstractIn the fall of 1998, two important financial regulatory reform acts were passed in Japan. The first of these acts, the Financial Recovery Act, created a bridge bank scheme and provided funds for the resolution of failed banks. The second act, the Rapid Revitalization Act, provided funds for the assistance of troubled banks. While both of these acts provided some government assistance to the banking sector, they also called for reforms aimed at strengthening the regulatory environment. ; Using an event study framework, this paper examines the evidence in equity markets concerning the anticipated impact of the regulatory reforms. Our evidence suggests that the Financial Recovery Act was expected to hurt large banks, while the anticipated impact of the act by financial strength was mixed. In contrast, the anticipated impact of the Rapid Revitalization Act was expected to be unambiguously anti-reform, as news favorable to its passage disproportionately favored large and weak Japanese banks.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of the Japanese and International Economies.
Volume (Year): 17 (2003)
Issue (Month): 3 (September)
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Other versions of this item:
- Mark M. Spiegel & Nobuyoshi Yamori, 2002. "The impact of Japan’s financial stabilization laws on bank equity values," Proceedings, Federal Reserve Bank of San Francisco, issue Sep.
- Mark Spiegel & Nobuyoshi Yamori, 2001. "The impact of Japan's financial stabilization laws on bank equity values," Pacific Basin Working Paper Series 2001-07, Federal Reserve Bank of San Francisco.
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