AN EXAMINATION OF THE WEALTH TRANSFER EFFECT OF THE FINANCIAL SERVICES MODERNIZATION ACT OF 1999

摘要

This paper examines the impacts of the Financial Services Modernization Act (FSMA) of 1999 on small banks. Small banks are less likely to benefit from this deregulation due to their small size which limits their capacity to expand their product services into investment and insurance industries. This research indicates that the market reacts negatively to FMSA for small banks. The losses are negatively related to bank size. This result is attributable to the decline in the competitiveness of small banks and the increase in the risk of such banks relative to that of large banks.