Do Banks Suffer From Stigmatization In Equity Capital Markets?

Sammanfattning: This Master's Thesis investigates which effect the Federal Reserve's release of detailed Discount Window transaction data on March 31, 2011 had on the borrowing banks' stock performance. Three sets of event studies indicate that those banks did not experience negative abnormal stock returns, rejecting the hypothesis that, in equity capital markets, there is a negative stigma attached to borrowing under the Discount Window facility. This finding provides empirical support for the Dodd-Frank Act's requirement to reveal detailed Discount Window lending data after eight quarters as a tool to improve the transparency of central banks without limiting their effectiveness to act as lender of last resort. Furthermore, the analysis suggests that the Federal Reserve succeeded in designing additional credit and liquidity programs during the financial crisis between 2007 and 2009 as their usage was not associated with negative abnormal stock returns.