An Event Study Analysis of Too-Big-to-Fail After the Dodd-Frank Act: Who Is Too Big to Fail?: Who is too big to fail?

Kyle D. Allen; Ken B. Cyree; Mattew D. Whitledge; Drew B. Winters; Matthew D. Whitledge

doi:10.1016/j.jeconbus.2018.03.003

An Event Study Analysis of Too-Big-to-Fail After the Dodd-Frank Act: Who Is Too Big to Fail? Who is too big to fail?

Kyle D. Allen, Ken B. Cyree, Mattew D. Whitledge, Drew B. Winters, Matthew D. Whitledge

Finance Department

Research output: Contribution to journal › Article › peer-review

6 Scopus citations

Abstract

One feature of the Dodd-Frank Act is the elimination of too-big-to-fail (TBTF) banks. TBTF is a government guarantee of large banks that has been shown to increase the value of these banks, so removing the guarantee should result in a price decline of TBTF bank stock. Using event study methods, we find very limited reaction to the process of eliminating TBTF. Specifically, there is limited reaction among the largest banks and banks receiving special attention, such as Systemically Important Financial Institutions (SIFI) banks. Instead, smaller banks not receiving special attention show some evidence of negative returns with the elimination of TBTF.

Original language	American English
Pages (from-to)	19-31
Number of pages	13
Journal	Journal of Economics and Business
Volume	98
DOIs	https://doi.org/10.1016/j.jeconbus.2018.03.003
State	Published - 1 Jul 2018

Keywords

Dodd-Frank act
event study
too-big-to-fail

EGS Disciplines

Marketing

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Cite this

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title = "An Event Study Analysis of Too-Big-to-Fail After the Dodd-Frank Act: Who Is Too Big to Fail?: Who is too big to fail?",

abstract = " One feature of the Dodd-Frank Act is the elimination of too-big-to-fail (TBTF) banks. TBTF is a government guarantee of large banks that has been shown to increase the value of these banks, so removing the guarantee should result in a price decline of TBTF bank stock. Using event study methods, we find very limited reaction to the process of eliminating TBTF. Specifically, there is limited reaction among the largest banks and banks receiving special attention, such as Systemically Important Financial Institutions (SIFI) banks. Instead, smaller banks not receiving special attention show some evidence of negative returns with the elimination of TBTF.",

keywords = "Dodd-Frank act, event study, too-big-to-fail",

author = "Allen, {Kyle D.} and Cyree, {Ken B.} and Whitledge, {Mattew D.} and Winters, {Drew B.} and Whitledge, {Matthew D.}",

note = "Allen, Kyle D.; Cyree, Ken B.; Whitledge, Mattew D.; and Winters, Drew B. (2018). {"}An Event Study Analysis of Too-Big-to-Fail After the Dodd-Frank Act: Who Is Too Big to Fail?{"}. Journal of Economics and Business, 98, 19-31. http://dx.doi.org/10.1016/j.jeconbus.2018.03.003",

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AU - Allen, Kyle D.

AU - Cyree, Ken B.

AU - Whitledge, Mattew D.

AU - Winters, Drew B.

AU - Whitledge, Matthew D.

N1 - Allen, Kyle D.; Cyree, Ken B.; Whitledge, Mattew D.; and Winters, Drew B. (2018). "An Event Study Analysis of Too-Big-to-Fail After the Dodd-Frank Act: Who Is Too Big to Fail?". Journal of Economics and Business, 98, 19-31. http://dx.doi.org/10.1016/j.jeconbus.2018.03.003

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N2 - One feature of the Dodd-Frank Act is the elimination of too-big-to-fail (TBTF) banks. TBTF is a government guarantee of large banks that has been shown to increase the value of these banks, so removing the guarantee should result in a price decline of TBTF bank stock. Using event study methods, we find very limited reaction to the process of eliminating TBTF. Specifically, there is limited reaction among the largest banks and banks receiving special attention, such as Systemically Important Financial Institutions (SIFI) banks. Instead, smaller banks not receiving special attention show some evidence of negative returns with the elimination of TBTF.

AB - One feature of the Dodd-Frank Act is the elimination of too-big-to-fail (TBTF) banks. TBTF is a government guarantee of large banks that has been shown to increase the value of these banks, so removing the guarantee should result in a price decline of TBTF bank stock. Using event study methods, we find very limited reaction to the process of eliminating TBTF. Specifically, there is limited reaction among the largest banks and banks receiving special attention, such as Systemically Important Financial Institutions (SIFI) banks. Instead, smaller banks not receiving special attention show some evidence of negative returns with the elimination of TBTF.

KW - Dodd-Frank act

KW - event study

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UR - https://scholarworks.boisestate.edu/marketing_facpubs/51

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