ON THE SHAREHOLDER WEALTH EFFECTS OF DEPOSIT INSURANCE PREMIUM REVISIONS ON LARGE, PUBLICLY TRADED COMMERCIAL BANKS | Zendy

Biswas Rita | Zendy; Fraser Donald R. | Zendy; Hebb Gregory | Zendy

AI Assistant Blog Pricing

Home ZAIA Blog

Premium

ON THE SHAREHOLDER WEALTH EFFECTS OF DEPOSIT INSURANCE PREMIUM REVISIONS ON LARGE, PUBLICLY TRADED COMMERCIAL BANKS

Author(s) -

Biswas Rita,

Fraser Donald R.,

Hebb Gregory

Publication year - 2000

Publication title -

journal of financial research

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.319

H-Index - 49

eISSN - 1475-6803

pISSN - 0270-2592

DOI - 10.1111/j.1475-6803.2000.tb00740.x

Subject(s) - deposit insurance , shareholder , equity (law) , monetary economics , risk premium , business , shareholder value , economics , financial system , finance , corporate governance , political science , law

Evidence is provided from changes in deposit insurance premiums in the early 1990s on the validity of the premium absorption hypothesis and the premium shifting hypothesis. Analysis of abnormal market returns associated with deposit insurance events using a market‐model event‐study methodology suggests that reductions in deposit insurance premiums are associated with increases in the market value of banking organizations; conversely, increases in deposit insurance premiums are associated with decreases in market wealth. The largest banks in the sample and banks with low equity capital (and low risk‐based capital ratios) appear to be most affected. These results are generally consistent with the premium absorption hypothesis but inconsistent with the premium shifting hypothesis.

This content is not available in your region!

Continue researching here.

Having issues? You can contact us here

Accelerating Research