Theses and Dissertations

Date of Award

8-2017

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Business Administration

First Advisor

Dr. Dave Jackson

Second Advisor

Dr. Andre Mollick

Third Advisor

Dr. Diego Escobari

Abstract

Starting in the 1980s, financial innovations and technology improvements led to important changes in corporate financing, primarily a significant decrease in the share of bank loans and an increased share of bonds and stocks. This change challenged the traditional banking business. The Gramm–Leach–Bliley (GLB) Act of 1999 allowed banks to engage more freely in non-traditional activities such as investment banking, venture capital, security brokerage, insurance underwriting, and asset securitization. Further, GLB encouraged changes in banks' business models and income mix that were already underway. Chapter I shows an introduction of non-traditional activities. Chapter II examines the relationship between non-traditional activities, systemic risk, profitability and institutional ownership in the BHCs in the U.S.. The results show that the expansion of banking business scope does have significant impacts on bank's systemic risk and profitability. The results also show that bank's institutional ownership do have significant impacts on bank's contribution on financial system.

TARP was one of the most aggressive U.S government coordinated fiscal and monetary policy responses to a financial crisis since the Great Recession in the 1930s. Chapter III addresses the impacts of TARP injection on recipients' non-traditional activities, performance, and insolvency risk between public and private, deadbeat repayment, and full repayment recipients. The results show that participating in TARP significantly, both statistically and economically, reduced the recipient's ROA, suggesting that the TARP program is associated with lower performance as measured by ROA. While, the results also shows that the TARP program significantly, statistically and economically, reduces risk as measured by Z-Score, suggesting the TARP injection reduces the risk of a bank. From this perspective, TARP program achieves its objective to improve the capital adequacy. Finally, the analysis shows that the TARP program leads to a positive increase in stock returns of public banks, suggesting the positive impact of the TARP program on stabilizing the market and restoring investor's market confidence, a major TARP objective as well.

Comments

Copyright 2017 Lijuan Sun. All Rights Reserved.

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