Failed bank auctions and externalities

Zhou, Tim (2015): Failed bank auctions and externalities.

Abstract

We measure the negative externalities experienced by non-winning bidders and examine the determinants of these externalities in the Federal Deposit Insurance Corporation (FDIC) failed bank auctions. We show that unsuccessful bidders experience significantly negative cumulative abnormal returns when winning bidders enter non-winning bidders’ key markets as a new entrant by acquiring relatively larger targets and when infrequent bidders are involved.

• Item Type: MPRA Paper
• Language: English
• Keywords: FDIC, Banks, Auction, Externality
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D44 - Auctions; D - Microeconomics > D6 - Welfare Economics > D62 - Externalities; G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency ; Event Studies ; Insider Trading; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation

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