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The impact of expected regulatory changes: The case of banks following the 2016 U.S. election

Hachenberg, B. and Kiesel, F. and Kolaric, S. and Schiereck, D. (2017):
The impact of expected regulatory changes: The case of banks following the 2016 U.S. election.
In: Finance Research Letters, pp. 268-273, 22, ISSN 1544-6123,
[Online-Edition: http://dx.doi.org/10.1016/j.frl.2016.12.021],
[Article]

Abstract

We analyze bank stocks and credit default swap (CDS) spreads around the U.S. presidential election on November 8, 2016. We find a strong rally in bank stocks combined with an overall widening in bank CDS spreads during the days after the announcement of the election result. Following Donald Trump's victory, market participants appear to anticipate a lowering of financial sector regulation, particularly with respect to the Dodd-Frank act. In addition, we find that Global Systemically Important Banks (G-SIBs) reacted more positive than non-G-SIBs, with stocks having larger gains and CDS remaining relatively stable. Non-G-SIB stocks, on the other hand, gained less and their CDS widened, indicating less favorable changes from deregulation than for G-SIBs.

Item Type: Article
Erschienen: 2017
Creators: Hachenberg, B. and Kiesel, F. and Kolaric, S. and Schiereck, D.
Title: The impact of expected regulatory changes: The case of banks following the 2016 U.S. election
Language: English
Abstract:

We analyze bank stocks and credit default swap (CDS) spreads around the U.S. presidential election on November 8, 2016. We find a strong rally in bank stocks combined with an overall widening in bank CDS spreads during the days after the announcement of the election result. Following Donald Trump's victory, market participants appear to anticipate a lowering of financial sector regulation, particularly with respect to the Dodd-Frank act. In addition, we find that Global Systemically Important Banks (G-SIBs) reacted more positive than non-G-SIBs, with stocks having larger gains and CDS remaining relatively stable. Non-G-SIB stocks, on the other hand, gained less and their CDS widened, indicating less favorable changes from deregulation than for G-SIBs.

Journal or Publication Title: Finance Research Letters
Volume: 22
Divisions: 01 Department of Law and Economics > Betriebswirtschaftliche Fachgebiete
01 Department of Law and Economics > Betriebswirtschaftliche Fachgebiete > Corporate finance
01 Department of Law and Economics
Date Deposited: 03 Jan 2017 09:31
Official URL: http://dx.doi.org/10.1016/j.frl.2016.12.021
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