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Title: Beyond the financial system: the real effects of bank bailout
Authors: LIU XIN
Keywords: Banking, Government Rescue Program
Issue Date: 20-May-2014
Source: LIU XIN (2014-05-20). Beyond the financial system: the real effects of bank bailout. ScholarBank@NUS Repository.
Abstract: Using the Trouble Asset Relief Program (TARP) in the United States as a laboratory, this paper examines the impacts of government bank bailouts on the real economy. The paper first finds that the aided banks' clients, on average, suffer an economically significant valuation loss of 2.5% in the 3-day cumulative abnormal return around the announcements of their main banks? approval to TARP. Such valuation loss is aggravated with banks? poor ex-ante financial conditions. Further evidences show that aided banks reduce supply of credit in post-TARP period, making their clients become more financially constrained and reduce their capital investment subsequently. Overall, findings in the paper provide systematic evidences suggesting that TARP failed to ease the credit crunch and to stimulate investment in the real economy.
Appears in Collections:Ph.D Theses (Open)

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