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Failed bank auctions and externalities

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  • Zhou, Tim

Abstract

We measure the negative externalities experienced by non-winning bidders and examine the determinants of these externalities in the Federal Deposit Insurance Corporation (FDIC) failed bank auctions. We show that unsuccessful bidders experience significantly negative cumulative abnormal returns when winning bidders enter non-winning bidders’ key markets as a new entrant by acquiring relatively larger targets and when infrequent bidders are involved.

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  • Zhou, Tim, 2015. "Failed bank auctions and externalities," MPRA Paper 65587, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:65587
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    References listed on IDEAS

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    1. Capponi, Agostino & Dooley, John M. & Oet, Mikhail V. & Ong, Stephen J., 2017. "Capital and resolution policies: The US interbank market," Journal of Financial Stability, Elsevier, vol. 30(C), pages 229-239.

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    More about this item

    Keywords

    FDIC; Banks; Auction; Externality;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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