The market survival of publicly traded traditional and market-based financial intermediaries

Abstract

The financial crisis highlighted the pivotal role that financial intermediaries play in the economy. Recent research has analyzed the differences between traditional and market-based financial intermediaries, noting the greater balance sheet volatility of the former category. Using these volatility differences as a basis, this paper compares the stock market delisting behavior of market-based and traditional financial intermediaries. Using survival analysis, I find that market-based intermediaries carry greater cumulative incidence of stock market delisting due to firm failure and M&A activity relative to traditional intermediaries. Additionally, idiosyncratic risk plays an important role in the survival behavior across these institutional structures.

Publication
Applied Economics and Finance, Vol 2, No. 2, pp. 52-67 http://dx.doi.org/10.11114/aef.v2i2.740