U.S. Banks, Crises, and Bailouts: From Mexico to Ltcm

26 Pages Posted: 29 Feb 2000

See all articles by Bong-Chan Kho

Bong-Chan Kho

Seoul National University, Business School

Dong Wook Lee

Korea University

René M. Stulz

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: December 1999

Abstract

This paper investigates the impact on bank stock prices of emerging market currency crises and bailouts. The stock market distinguishes between banks with exposure to a crisis country and other banks. In general, banks with exposures to a crisis country are affected adversely by currency events and positively by bailouts. Other banks are mostly unaffected by events in countries experiencing a crisis. The paper uses the impact of the LTCM crisis on bank stock prices to put the emerging market events in perspective. The LTCM crisis had no significant contagion effects in the banking sector either, but banks that participated in the LTCM rescue experienced negative stock returns when the rescue was announced.

JEL Classification: F3, F33, F34, F4, F42, G15, G21

Suggested Citation

Kho, Bong-Chan and Lee, Dong Wook and Stulz, Rene M., U.S. Banks, Crises, and Bailouts: From Mexico to Ltcm (December 1999). Available at SSRN: https://ssrn.com/abstract=202208 or http://dx.doi.org/10.2139/ssrn.202208

Bong-Chan Kho

Seoul National University, Business School ( email )

607 LG Hall
1 Gwanak-ro, Gwanak-gu
Seoul, 08826
Korea, Republic of (South Korea)
+82-2-880-8798 (Phone)
+82-2-876-8411 (Fax)

Dong Wook Lee

Korea University ( email )

523 Hyundai Motor Hall
Korea University Business School
Seoul, 02841
Korea, Republic of (South Korea)
+82.2.3290.2820 (Phone)
+82.2.3290.1307 (Fax)

Rene M. Stulz (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

HOME PAGE: http://www.cob.ohio-state.edu/fin/faculty/stulz

National Bureau of Economic Research (NBER)

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European Corporate Governance Institute (ECGI)

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1000 Brussels
Belgium

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