Essays on stock performance, regulation, and financial stability of banks and insurers

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2015

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Abstract

This dissertation contributes to the discussion on financial stability and regulation in the form of five independent articles that empirically explore different facets of systemic risk of banks and insurers. An overview and motivation is given in chapter one. In chapter two, systemic risk for an international panel of insurers is empirically investigated using three prominent measures of systemic risk proposed in the literature as dependent variables in panel regressions. These analyses employ key indicators of systemic relevance suggested by regulators including insurers’ size, leverage, and interconnectedness. The third chapter is a follow-up study to the first analysis and explores the methodology of regulators to detect systemically important financial institutions. Chapter four is dedicated to the relation of stock performance and differences in regulation and supervision of banks around the world. Chapter five of the dissertation introduces two measures of individual and market-level “crisis sentiment” and analyzes its impact on insurer stock prices. Finally, the analyses in chapter six make use of internet search volume data on the Federal Deposit Insurance Corporation to proxy for the attention and knowledge of U.S. depositors on deposit insurance schemes. This empirical study investigates whether bank deposit withdrawals are mainly driven by sentiment and attention to deposit insurance rather than bank fundamentals.

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Keywords

Systemic risk, Regulation, Financial stability, Investor sentiment

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