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Deposit insurance and the stock market: evidence from Denmark

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  • Jan Bartholdy
  • Glenn Boyle
  • Roger Stover

Abstract

Previous studies of the relationship between deposit insurance and bank market values have usually been limited to consideration of minor changes in bank regulations, but the 1987 initiation of deposit insurance in Denmark permits examination of a potentially major policy shift. It is found that the market values of large Danish banks exhibited a modest positive reaction to the announcement of insurance, but that small risky banks responded negatively. These results partially contrast with those previously found for the USA, an outcome that seems likely to reflect the interaction of deposit insurance with the particular characteristics of the pre-existing Danish regulatory system.

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  • Jan Bartholdy & Glenn Boyle & Roger Stover, 2004. "Deposit insurance and the stock market: evidence from Denmark," The European Journal of Finance, Taylor & Francis Journals, vol. 10(6), pages 567-578.
    • Handle: RePEc:taf:eurjfi:v:10:y:2004:i:6:p:567-578
    DOI: 10.1080/1351847042000255670
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    References listed on IDEAS

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