Bank stock performance and bank regulation around the globe

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We analyze the effect of bank capital, regulation, and supervision on the annual stock performance of global banks during the period of 1999–2012. We study a large comprehensive panel of international banks and find that higher Tier 1 capital decreases a bank's stock performance over the whole sample period. However, during turbulent times stocks of more highly capitalized banks perform significantly better. Additionally, we find strong evidence that banks that are more likely to receive government bailout during financial distress realize smaller stock performance. In contrast, we find no convincing evidence that banks that generate higher non-interest income have a higher performance.
Original languageEnglish
JournalEuropean Journal of Finance
Issue number2
Pages (from-to)77-113
Number of pages37
Publication statusPublished - 22.01.2018