The wealth effects from a subordinated debt policy: evidence from passage of the Gramm–Leach–Bliley Act

Andrew H Chen, Kenneth Robinson and Thomas Siems

Review of Financial Economics, 2004, vol. 13, issue 1-2, 103-119

Abstract: Using an event study methodology which assumes that returns follow a GARCH (1,1) process, we estimate the wealth effects of a possible subordinated debt policy by examining the stock market reaction to the passage of the Gramm–Leach–Bliley (GLB) Act. A portfolio of banks with relatively high amounts of subordinated debt experienced positive and significant wealth effects associated with passage of the GLB. Portfolios made up of all banks, and those with no subordinated debt experience statistically insignificant wealth effects. We argue that these results suggest that policymakers should consider the use of subordinated debt as a way to enhance market discipline on banks.

Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1016/S1058-3300(03)00025-9

Related works:
Journal Article: The wealth effects from a subordinated debt policy: evidence from passage of the Gramm-Leach-Bliley Act (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:revfec:v:13:y:2004:i:1-2:p:103-119

Access Statistics for this article

More articles in Review of Financial Economics from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().