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How to Stop a Herd of Running Bears? Market Response to Policy Initiatives during the Global Financial Crisis

Abstract
This paper examines the impact of macroeconomic and financial sector policy announcements in the United States, the United Kingdom, the euro area, and Japan during the recent crisis on interbank credit and liquidity risk premia. Announcements of interest rate cuts, liquidity support, liability guarantees, and recapitalization were associated with a reduction of interbank risk premia, albeit to a different degree during the subprime and global phases of the crisis. Decisions not to reduce interest rates and bail out individual banks in an ad hoc manner had adverse repercussions, both domestically and abroad. The results are robust to controlling for the surprise content of announcements and using alternative measures of financial distress
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Measuring Financial Sector Distress and Policy Initiatives; A. The Libor-OIS Spread; 1 The 3-month Libor-OIS Spreads in Levels and First Differences, in the United States, United Kingdom, Euro Area and Japan, January 1, 2007-March 31, 2009; B. Crisis Timeline; C. Policy Announcements; 1. Classification of Policy Measures; 2. Number of Front-Page Policy Announcements, June 1, 2007-March 31, 2009; 2. Cumulative Number of Front-Page Policy Announcements, June 1, 2007-March 31, 2009; III. Event Study Methodology
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (80 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781462330539

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