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Holding company affiliation and bank stability: Evidence from the US banking sector

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  • Raykov, Radoslav
  • Silva-Buston, Consuelo

Abstract

Is affiliation with a multibank holding company beneficial for bank stability? We revisit this question by examining the response of market-based risk measures of independent and multibank-holding-company banks to an exogenous negative shock (the 2005 US hurricane season). We find evidence consistent with bank holding companies playing an important role in mitigating negative shocks, with affiliates of more liquid holdings remaining more stable in terms of both systemic and individual stability. We also conduct an event study showing that markets perceive multibank-holding-company banks' dynamics after the shock as value-enhancing.

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  • Raykov, Radoslav & Silva-Buston, Consuelo, 2020. "Holding company affiliation and bank stability: Evidence from the US banking sector," Journal of Corporate Finance, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:corfin:v:65:y:2020:i:c:s0929119920301838
    DOI: 10.1016/j.jcorpfin.2020.101739
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    More about this item

    Keywords

    Holding company banks; Systemic risk; Financial stability;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services

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