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Financial Sector Reform After the Crisis: Has Anything Happened?

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  • Alexander Schaefer

    () (hair of International Macroeconomics, Johannes Gutenberg-Universitaet Mainz, Germany)

  • Isabel Schnabel

    () (Chair of Financial Economics, Johannes Gutenberg-Universitaet Mainz, Germany)

  • Beatrice Weder di Mauro

    () (Chair of International Macroeconomics, Johannes Gutenberg-Universitaet Mainz, Germany)

Abstract

We analyze the reaction of stock returns and CDS spreads of banks from Europe and the United States to four major regulatory reforms in the aftermath of the subprime crisis, employing an event study analysis. In contrast to the public perception that nothing has happened, we find that financial markets indeed reacted to the structural reforms enacted at the national level. All reforms succeeded in reducing bail-out expectations, especially for systemic banks. However, banks’ profitability was also affected, showing up in lower equity returns. The strongest effects were found for the Dodd-Frank Act (especially the Volcker rule), whereas market reactions to the German restructuring law were small.

Suggested Citation

  • Alexander Schaefer & Isabel Schnabel & Beatrice Weder di Mauro, 2013. "Financial Sector Reform After the Crisis: Has Anything Happened?," Working Papers 1304, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 24 May 2013.
  • Handle: RePEc:jgu:wpaper:1304
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    File URL: http://www.macro.economics.uni-mainz.de/RePEc/pdf/Discussion_Paper_1304.pdf
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    Cited by:

    1. repec:eee:jebusi:v:96:y:2018:i:c:p:69-89 is not listed on IDEAS
    2. Ekaterina Neretina & Cenkhan Sahin & Jakob de Haan, 2014. "Banking stress test effects on returns and risks," DNB Working Papers 419, Netherlands Central Bank, Research Department.
    3. Randall Kroszner, 2016. "A Review of Bank Funding Cost Differentials," Journal of Financial Services Research, Springer;Western Finance Association, vol. 49(2), pages 151-174, June.

    More about this item

    Keywords

    Financial sector reform; financial stability; Dodd-Frank Act; Volcker rule; Vickers reform; German restructuring law; Swiss too-big-to-fail regulation; event study;

    JEL classification:

    • 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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