TY - JOUR AU - Ahmad, Nor Hayati AU - Ariff, Mohamed PY - 2006/01/03 Y2 - 2024/03/29 TI - Regulation of Deposit-Taking Institutions: Price Effect at Disclosures of New Regulations JF - International Journal of Banking and Finance JA - IJBF VL - 3 IS - 0 SE - Articles DO - UR - https://e-journal.uum.edu.my/index.php/ijbf/article/view/8350 SP - 63-72 AB - <div>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.</div><p>&nbsp;</p> ER -