Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New Regulations
This paper presents findings on the impact of revisions to a unique bank regulation yet studied. An old hypothesis in banking literature is tested by examining share price reactions to two-way changes to statutory reserve ratio (SRR) requirement over a recent eight-year period. Announcements of thes...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Universiti Utara Malaysia
2006-01-01
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| Series: | The International Journal of Banking and Finance |
| Subjects: | |
| Online Access: | https://www.e-journal.uum.edu.my/index.php/ijbf/article/view/8350 |
| _version_ | 1828069222867009536 |
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| author | Nor Hayati Ahmad Mohamed Ariff |
| author_facet | Nor Hayati Ahmad Mohamed Ariff |
| author_sort | Nor Hayati Ahmad |
| collection | DOAJ |
| description | This paper presents findings on the impact of revisions to a unique bank regulation yet studied. An old hypothesis in banking literature is tested by examining share price reactions to two-way changes to statutory reserve ratio (SRR) requirement over a recent eight-year period. Announcements of these regulatory changes appear to lead to statistically and economically significant abnormal returns. These new findings suggest that a decrease in statutory reserve has a risk-reducing effect on financial institutions. Thus, this study provides a test of the prediction of theory that SRR is a powerful macroeconomics policy tool to revive an economy in the aftermath of a financial crisis.
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| first_indexed | 2024-04-11T00:14:58Z |
| format | Article |
| id | doaj.art-0ed0fe44a4b94667b018665cc344b864 |
| institution | Directory Open Access Journal |
| issn | 2811-3799 2590-423X |
| language | English |
| last_indexed | 2024-04-11T00:14:58Z |
| publishDate | 2006-01-01 |
| publisher | Universiti Utara Malaysia |
| record_format | Article |
| series | The International Journal of Banking and Finance |
| spelling | doaj.art-0ed0fe44a4b94667b018665cc344b8642023-01-09T03:08:51ZengUniversiti Utara MalaysiaThe International Journal of Banking and Finance2811-37992590-423X2006-01-013Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New RegulationsNor Hayati Ahmad0Mohamed Ariff1Universiti Utara MalaysiaMonash University, AustraliaThis paper presents findings on the impact of revisions to a unique bank regulation yet studied. An old hypothesis in banking literature is tested by examining share price reactions to two-way changes to statutory reserve ratio (SRR) requirement over a recent eight-year period. Announcements of these regulatory changes appear to lead to statistically and economically significant abnormal returns. These new findings suggest that a decrease in statutory reserve has a risk-reducing effect on financial institutions. Thus, this study provides a test of the prediction of theory that SRR is a powerful macroeconomics policy tool to revive an economy in the aftermath of a financial crisis. https://www.e-journal.uum.edu.my/index.php/ijbf/article/view/8350Financial institutionsregulationsriskprice effectprudential rules |
| spellingShingle | Nor Hayati Ahmad Mohamed Ariff Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New Regulations The International Journal of Banking and Finance Financial institutions regulations risk price effect prudential rules |
| title | Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New Regulations |
| title_full | Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New Regulations |
| title_fullStr | Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New Regulations |
| title_full_unstemmed | Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New Regulations |
| title_short | Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New Regulations |
| title_sort | regulation of deposit taking institutions price effect at disclosures of new regulations |
| topic | Financial institutions regulations risk price effect prudential rules |
| url | https://www.e-journal.uum.edu.my/index.php/ijbf/article/view/8350 |
| work_keys_str_mv | AT norhayatiahmad regulationofdeposittakinginstitutionspriceeffectatdisclosuresofnewregulations AT mohamedariff regulationofdeposittakinginstitutionspriceeffectatdisclosuresofnewregulations |