Cornett is an Assistant Professor in the Finance Department, School of Business, Southern Methodist University. Tehranian is a Professor in the Finance Department, School of Management, Boston College. The authors wish to thank Sankar De, Thomas Downs, Lucy Reuben and William Wilhelm for comments. We also thank the editor, Stephen A. Buser and an anonymous referee for helpful and stimulating comments. An earlier version of the paper was presented at the 1988 Annual FMA Meetings. The first author acknowledged financial support from the Women's Financial Series at Southern Methodist University. Finally, thanks are due to Afarin Sadr and Naveed Esmaiel for their research assistance.
An Examination of the Impact of the Garn-St. Germain Depository Institutions Act of 1982 on Commercial Banks and Savings and Loans
Article first published online: 30 APR 2012
1990 The American Finance Association
The Journal of Finance
Volume 45, Issue 1, pages 95–111, March 1990
How to Cite
CORNETT, M. M. and TEHRANIAN, H. (1990), An Examination of the Impact of the Garn-St. Germain Depository Institutions Act of 1982 on Commercial Banks and Savings and Loans. The Journal of Finance, 45: 95–111. doi: 10.1111/j.1540-6261.1990.tb05082.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
This paper evaluates the effects of events leading to the passage of the Garn-St. Germain Depository Institutions Act of 1982. The evidence suggests that the call for reform by President Reagan's Housing Commission and the Senate passage of the bill produced positive abnormal returns to stockholders of large savings and loans and commercial banks. Stockholders of small S&Ls and banks, on the other hand, generally experienced negative abnormal returns. Furthermore, when hopes of passage of the Act faded, significant negative (positive) abnormal returns were experienced by stockholders of large (small) S&Ls and banks.