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The Paulson Plan: Who Are the Winners?

Author

Listed:
  • Eric de Bodt

    (Université Lille Nord de France)

  • Frédéric Lobez

    (Université Lille Nord de France)

  • Junyao Zhang

    (Université Lille Nord de France)

Abstract

The joint plan by the U.S. Treasury and the Federal Deposit Insurance Corporation (called the Paulson plan), announced on October 13, 2008, represented the largest financial transfer from taxpayers to financial institutions in U.S. history. Existing research has analyzed whether this massive state intervention improved the recipients’ financial health, and thus in this study, we focus on its competitive distortion effects. Our investigation reveals that the Paulson plan was anything but neutral with respect to competition among industry participants. Both short- and long-term results confirm that the winners were the largest banks.

Suggested Citation

  • Eric de Bodt & Frédéric Lobez & Junyao Zhang, 2014. "The Paulson Plan: Who Are the Winners?," Bankers, Markets & Investors, ESKA Publishing, issue 130, pages 5-22, May-June.
    • Handle: RePEc:rbq:journl:i:130:p:5-22
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    More about this item

    Keywords

    TARP; The Paulson plan; Value Effect; Event Study; Distance to Default;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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