Journal of Banking & Finance Vol. 25 No. 2 2001

The impact of FDICIA on bank returns and risk: Evidence from the capital markets

Aigbe Akhigbe¹; Ann Marie Whyte²

¹ Florida Atlantic University · ² University of Central Florida

Abstract

This study examines the impact of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991 on bank stock returns and risk. We find that FDICIA had a generally positive effect on bank stock returns and resulted in a significant reduction in bank risk. The extent of the risk reduction varies based on the capitalization, size, and credit risk of the institutions with poorly capitalized, large, and high credit risk banks experiencing the greatest risk reduction. The results obtained using two separate control groups also bolster the conclusion that FDICIA’s passage resulted in a significant decline in bank risk.

DOI

10.1016/s0378-4266(99)00131-4

Volume

25

Issue

2

Pages

393-417

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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