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The light and dark side of TARP

  • Uhde, Andre
  • Farruggio, Christian
  • Michalak, Tobias C.

This paper empirically investigates the impact of the first announcement of TARP, the announcement of revised TARP, respective capital infusions under TARP-CPP and capital repayments on changes in shareholder value and the risk exposure of supported U.S. banks. Our analysis reveals a light and a dark side of TARP. While announcements as well as capital repayments may provoke positive wealth effects and a decrease in bank risk, equity capital injections to banks are observed to be a severe impediment to restore market confidence and financial stability. Furthermore, while TARP announcements and capital injections may increase systemic risk, no significant effect on systemic risk is found for capital repayments.

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File URL: http://econstor.eu/bitstream/10419/80004/1/VfS_2013_pid_446.pdf
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Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 80004.

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Date of creation: 2013
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Handle: RePEc:zbw:vfsc13:80004
Contact details of provider: Web page: http://www.socialpolitik.org/
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