Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New Regulations

Authors

  • Nor Hayati Ahmad Universiti Utara Malaysia, Malaysia
  • Mohamed Ariff Monash University, Australia

DOI:

https://doi.org/10.32890/ijbf2005.3.4

Keywords:

Financial institutions, regulations, risk, price effect, prudential rules

Abstract

This paper presents findings on the impact of revisions to a unique bank regulation yet studied. An old hypothesis in banking literature is tested by examining share price reactions to two-way changes to statutory reserve ratio (SRR) requirement over a recent eight-year period. Announcements of these regulatory changes appear to lead to statistically and economically significant abnormal returns. These new findings suggest that a decrease in statutory reserve has a risk-reducing effect on financial institutions. Thus, this study provides a test of the prediction of theory that SRR is a powerful macroeconomics policy tool to revive an economy in the aftermath of a financial crisis.

 

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Published

03-01-2006

Issue

Vol. 3 (2005): Special Issue Vol. 3, 2005

Section

Articles

How to Cite

Ahmad, N. H., & Ariff, M. (2006). Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New Regulations. International Journal of Banking and Finance, 3, 63-72. https://doi.org/10.32890/ijbf2005.3.4

Research impact

Harvested 2026-09-07
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Identifiers DOI 10.32890/ijbf2005.3.4 OpenAlex W122184638

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