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Regulation of deposit-taking institutions: Price effect at disclosures of new regulations


Ahmad, Nor Hayati and Ariff, Mohamed (2005) Regulation of deposit-taking institutions: Price effect at disclosures of new regulations. The International Journal of Banking and Finance , 3 & 4. pp. 63-72. ISSN 1617-722

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Abstract

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, his study provides a test of the prediction of theory that SRR is a powerful macroeconomic policy tool to revive an economy in the aftermath of a financial crisis.

Item Type: Article
Uncontrolled Keywords: Financial institutions, Regulations, Risk, Price effect, Prudential rules
Subjects: H Social Sciences > HG Finance
Divisions: College of Business
Depositing User: Mrs. Norazmilah Yaakub
Date Deposited: 14 Aug 2011 04:05
Last Modified: 14 Aug 2011 04:05
URI: http://repo.uum.edu.my/id/eprint/3564

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