Equity Returns in the Banking Sector in the Wake of the Great Recession and the European Sovereign Debt Crisis

Author/Editor:

Jorge A Chan-Lau ; Estelle X Liu ; Jochen M. Schmittmann

Publication Date:

July 1, 2012

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This study finds that equity returns in the banking sector in the wake of the Great Recession and the European sovereign debt crisis have been driven mainly by weak growth prospects and heightened sovereign risk and to a lesser extent, by deteriorating funding conditions and investor sentiment. While the equity return performance in the banking sector has been dismal in general, better capitalized and less leveraged banks have outperformed their peers, a finding that supports policymakers’ efforts to strengthen bank capitalization.

Series:

Working Paper No. 12/174

Subject:

English

Publication Date:

July 1, 2012

ISBN/ISSN:

9781475505221/1018-5941

Stock No:

WPIEA2012174

Format:

Paper

Pages:

22

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