{"title":"Market reaction to EU CRD IV regulation in the banking industry","authors":"Sara Longo , Michele Fabrizi , Antonio Parbonetti","doi":"10.1016/j.ribaf.2024.102652","DOIUrl":null,"url":null,"abstract":"<div><div>This paper aims to provide evidence on the market reaction to the EU CRD IV regulation announcements in the EU banking industry and examine their determinants at the bank and country levels. EU CRD IV came up in the aftermath of the 2008 financial crisis, and it is recognized as the most notable regulatory initiative at the European level to increase overall bank transparency. Employing an event study approach around 15 announcements between 2011 and 2013, we document a negative market reaction on a sample of 145 listed European banks, indicating that transparency increases are borne by shareholders, with detrimental impacts on bank stock prices. We show that investors negatively perceive the introduction of this regulation, with more pronounced reactions for poorly transparent, large, and complex banks located in countries with high exposure to sovereign indebtedness. Our findings contribute to the debate on bank transparency matters.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"73 ","pages":"Article 102652"},"PeriodicalIF":6.3000,"publicationDate":"2024-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Research in International Business and Finance","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0275531924004458","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This paper aims to provide evidence on the market reaction to the EU CRD IV regulation announcements in the EU banking industry and examine their determinants at the bank and country levels. EU CRD IV came up in the aftermath of the 2008 financial crisis, and it is recognized as the most notable regulatory initiative at the European level to increase overall bank transparency. Employing an event study approach around 15 announcements between 2011 and 2013, we document a negative market reaction on a sample of 145 listed European banks, indicating that transparency increases are borne by shareholders, with detrimental impacts on bank stock prices. We show that investors negatively perceive the introduction of this regulation, with more pronounced reactions for poorly transparent, large, and complex banks located in countries with high exposure to sovereign indebtedness. Our findings contribute to the debate on bank transparency matters.
期刊介绍：
Research in International Business and Finance (RIBAF) seeks to consolidate its position as a premier scholarly vehicle of academic finance. The Journal publishes high quality, insightful, well-written papers that explore current and new issues in international finance. Papers that foster dialogue, innovation, and intellectual risk-taking in financial studies; as well as shed light on the interaction between finance and broader societal concerns are particularly appreciated. The Journal welcomes submissions that seek to expand the boundaries of academic finance and otherwise challenge the discipline. Papers studying finance using a variety of methodologies; as well as interdisciplinary studies will be considered for publication. Papers that examine topical issues using extensive international data sets are welcome. Single-country studies can also be considered for publication provided that they develop novel methodological and theoretical approaches or fall within the Journal''s priority themes. It is especially important that single-country studies communicate to the reader why the particular chosen country is especially relevant to the issue being investigated. [...] The scope of topics that are most interesting to RIBAF readers include the following: -Financial markets and institutions -Financial practices and sustainability -The impact of national culture on finance -The impact of formal and informal institutions on finance -Privatizations, public financing, and nonprofit issues in finance -Interdisciplinary financial studies -Finance and international development -International financial crises and regulation -Financialization studies -International financial integration and architecture -Behavioral aspects in finance -Consumer finance -Methodologies and conceptualization issues related to finance
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