The stock market impact of government interventions on financial services industry groups: Evidence from the 2007–2009 crisis

•We find leveraged firms earn significantly lower event period abnormal returns.•We note firms with higher trading volumes earn significantly lower event period abnormal returns.•We find that non-U.S. firms, perhaps due to diversification are relatively sheltered from the impact of the intervening events.•We find larger firms experience significantly higher increases in beta.•We find non-U.S. firms report lower changes in systematic risk. We examine the market reaction and shift in risk from nine prominent government interventions in response to the crisis between February 2007 and July 2009 on four types of institutions: banks, savings and loan associations (S&Ls), insurance companies, and real estate investment trusts (REITs). Overall, with the exception of the Troubled Assets Repurchase Program (TARP), the interventions were wealth-decreasing and risk-increasing events for financial institutions. Leveraged firms and firms with higher trading volumes earn significantly lower abnormal returns. For both during- and post-crisis periods, larger firms experience increases in systematic risk; non-U.S. firms experience lower changes in systematic risk.