Valuation effects of the International Banking Act on foreign banks operating in the United States

This study empirically evaluates the daily stock price behavior of 31 major foreign banks operating in the United States at the time of the passage of the International Banking Act of 1978. Statistically insignificant abnormal returns are observed during the months of debate over this legislation. However, negative and statistically significant abnormal returns are found after the bill was signed by President Carter. The empirical results of this analysis, taken together with those of previous research, suggest that the IBA was perceived at the time as having reduced the regulatory inequities between U.S. banks and foreign banks operating in the U.S. (Printed by permission of the publisher.)