The Market Survival of Publicly Traded Traditional and Market-Based Financial Intermediaries

Abstract

The financial crisis highlighted the pivotal role that financial intermediaries play in the economy. Recent research has analyzed the differences between traditional and market-based financial intermediaries, noting the greater balance sheet volatility of the former category. Using these volatility differences as a basis, this paper compares the stock market delisting behavior of market-based and traditional financial intermediaries. Using survival analysis, I find that market-based intermediaries carry greater cumulative incidence of stock market delisting due to firm failure and M&A activity relative to traditional intermediaries. Additionally, idiosyncratic risk plays an important role in the survival behavior across these institutional structures.

JEL Classifications: G20, G21