Shareholder wealth effects of interstate banking: The case of Delaware's Financial Center Development Act
✍ Scribed by Insup Lee; Robert Schweitzer
- Publisher
- Springer
- Year
- 1989
- Tongue
- English
- Weight
- 392 KB
- Volume
- 2
- Category
- Article
- ISSN
- 0920-8550
No coin nor oath required. For personal study only.
✦ Synopsis
The Financial Center Development Act (FCDA) of Delaware was signed into law in March 1981, to permit out-of-state bank holding companies (BHCs) to establish special purpose banking subsidiaries within the state of Delaware. The FCDA can be viewed as part of the growing national trend toward interstate banking. If interstate banking is to succeed, the benefits from BHCs establishing interstate subsidiaries must be consistent with the welfare of the BHCs shareholders. The purpose of this study is to determine the impact on shareholder wealth of the decision by BHCs to establish subsidiaries within the state of Delaware. Using event study methodology, the results from this study showthat the decision to establish a special purpose banking subsidiary within the state of Delaware under the FCDA is consistent with the maximization of shareholder wealth.