Market Reaction to the Issuance of Capital Instruments by Brazilian Banks

Banks are allowed to employ debt instruments in order to meet the minimum requirements of capital, as long as they comply with the subordination agreements as determined by the Basel Accords. This paper takes account of the effective powers of these instruments, viewed from the standpoint of the inv...

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Autores principales:	André Ricardo Moncaio Zanon, José Alves Dantas
Formato:	article
Lenguaje:	EN PT
Publicado:	FUCAPE Business School 2020
Materias:	capital instrument basel accords capital banks stock market Business HF5001-6182
Acceso en línea:	https://doaj.org/article/7d5e1e5e38154491ab969b96dc8a270f
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spelling	oai:doaj.org-article:7d5e1e5e38154491ab969b96dc8a270f2021-11-11T15:48:08ZMarket Reaction to the Issuance of Capital Instruments by Brazilian Banks1807-734X10.15728/bbr.2020.17.1.1https://doaj.org/article/7d5e1e5e38154491ab969b96dc8a270f2020-01-01T00:00:00Zhttp://www.redalyc.org/articulo.oa?id=123062398001https://doaj.org/toc/1807-734XBanks are allowed to employ debt instruments in order to meet the minimum requirements of capital, as long as they comply with the subordination agreements as determined by the Basel Accords. This paper takes account of the effective powers of these instruments, viewed from the standpoint of the investors, and seeks to assess their impact on the return on investments in the shares of the issuing banks within Brazil’s capital markets. The article is, to a large extent, based on the research findings of Ammann et al (2017). The results of the empirical tests - which were conducted by means of event studies that involved issuing 30 instruments during the period 12/2008 - 09/2017 - suggest that the issuances or announcements of these instruments had an adverse effect on the stock market value of the issuing banks. In addition, evidence was obtained that the market is unable to forecast the effects of these instruments before they take place. This paper seeks to contribute to the current literature on prudential regulations for banking and it hopes to assist banks in making decisions about capitalization.André Ricardo Moncaio ZanonJosé Alves DantasFUCAPE Business Schoolarticlecapital instrumentbasel accordscapitalbanksstock marketBusinessHF5001-6182ENPTBBR: Brazilian Business Review, Vol 17, Iss 1, Pp 1-23 (2020)
institution	DOAJ
collection	DOAJ
language	EN PT
topic	capital instrument basel accords capital banks stock market Business HF5001-6182
spellingShingle	capital instrument basel accords capital banks stock market Business HF5001-6182 André Ricardo Moncaio Zanon José Alves Dantas Market Reaction to the Issuance of Capital Instruments by Brazilian Banks
description	Banks are allowed to employ debt instruments in order to meet the minimum requirements of capital, as long as they comply with the subordination agreements as determined by the Basel Accords. This paper takes account of the effective powers of these instruments, viewed from the standpoint of the investors, and seeks to assess their impact on the return on investments in the shares of the issuing banks within Brazil’s capital markets. The article is, to a large extent, based on the research findings of Ammann et al (2017). The results of the empirical tests - which were conducted by means of event studies that involved issuing 30 instruments during the period 12/2008 - 09/2017 - suggest that the issuances or announcements of these instruments had an adverse effect on the stock market value of the issuing banks. In addition, evidence was obtained that the market is unable to forecast the effects of these instruments before they take place. This paper seeks to contribute to the current literature on prudential regulations for banking and it hopes to assist banks in making decisions about capitalization.
format	article
author	André Ricardo Moncaio Zanon José Alves Dantas
author_facet	André Ricardo Moncaio Zanon José Alves Dantas
author_sort	André Ricardo Moncaio Zanon
title	Market Reaction to the Issuance of Capital Instruments by Brazilian Banks
title_short	Market Reaction to the Issuance of Capital Instruments by Brazilian Banks
title_full	Market Reaction to the Issuance of Capital Instruments by Brazilian Banks
title_fullStr	Market Reaction to the Issuance of Capital Instruments by Brazilian Banks
title_full_unstemmed	Market Reaction to the Issuance of Capital Instruments by Brazilian Banks
title_sort	market reaction to the issuance of capital instruments by brazilian banks
publisher	FUCAPE Business School
publishDate	2020
url	https://doaj.org/article/7d5e1e5e38154491ab969b96dc8a270f
work_keys_str_mv	AT andrericardomoncaiozanon marketreactiontotheissuanceofcapitalinstrumentsbybrazilianbanks AT josealvesdantas marketreactiontotheissuanceofcapitalinstrumentsbybrazilianbanks
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Market Reaction to the Issuance of Capital Instruments by Brazilian Banks

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