Wealth effects of the basle accord on small banks

Abstract

This paper examines the share price reactions of small commercial banks to the announcement of the Basle Accord. Previous studies document that large banks have negative price reactions to the announcement of the accord. Findings here show that small banks have positive share price reactions. Our overall evidence gives some support to the notion that small banks had excessive capital before the Basle Accord, and the Accord created wealth effects in the banking industry.