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The Market's Assessment of the Financial Services Modernization Act of 1999
Author(s) -
Akhigbe Aigbe,
Whyte Ann Marie
Publication year - 2001
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.2001.tb00032.x
Subject(s) - capitalization , business , modernization theory , financial services , position (finance) , finance , stock (firearms) , market capitalization , financial system , stock market , economics , economic growth , mechanical engineering , paleontology , philosophy , linguistics , horse , engineering , biology
We examine the impact of the events leading up to and including the passage of the Financial Services Modernization Act (FSMA) of 1999 on the stock returns of banks, brokerage firms, and insurance companies. We find that the impact is positive for all institutions. Bank gains are positively related to size and capitalization. Brokerage firms gain regardless of size, but the gains are inversely related to capitalization and insurance companies gain regardless of size or capital position. The strong positive reaction suggests that the market expects the institutions to benefit from the new opportunities created by the FSMA's passage.