Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If you need an accessible version of this item please contact JSTOR User Support

Deposit Insurance and Wealth Effects: The Value of Being "Too Big to Fail"

Maureen O'Hara and Wayne Shaw
The Journal of Finance
Vol. 45, No. 5 (Dec., 1990), pp. 1587-1600
Published by: Wiley for the American Finance Association
DOI: 10.2307/2328751
Stable URL: http://www.jstor.org/stable/2328751
Page Count: 14
  • Read Online (Free)
  • Download ($33.95)
  • Cite this Item
If you need an accessible version of this item please contact JSTOR User Support
Deposit Insurance and Wealth Effects: The Value of Being "Too Big to Fail"
Preview not available

Abstract

This paper investigates the effect on bank equity values of the Comptroller of the Currency's announcement that some banks were "too big to fail" and that for those banks total deposit insurance would be provided. Using an event study methodology, we find positive wealth effects accruing to TBTF banks, with corresponding negative effects accruing to non-included banks. We demonstrate that the magnitude of these effects differed with bank solvency and size. We also show that the policy to which the market reacted was that suggested by the Wall Street Journal and not that actually intended by the Comptroller.

Page Thumbnails

  • Thumbnail: Page 
1587
    1587
  • Thumbnail: Page 
1588
    1588
  • Thumbnail: Page 
1589
    1589
  • Thumbnail: Page 
1590
    1590
  • Thumbnail: Page 
1591
    1591
  • Thumbnail: Page 
1592
    1592
  • Thumbnail: Page 
1593
    1593
  • Thumbnail: Page 
1594
    1594
  • Thumbnail: Page 
1595
    1595
  • Thumbnail: Page 
1596
    1596
  • Thumbnail: Page 
1597
    1597
  • Thumbnail: Page 
1598
    1598
  • Thumbnail: Page 
1599
    1599
  • Thumbnail: Page 
1600
    1600