Federal Regulation Of The United States On The Volatility Of Stock Returns

1702 WordsDec 1, 20147 Pages
1. Introduction This paper examines the impact of federal regulation in the United States on the volatility of stock returns for firms in different segments of the financial service industry. I examine the volatility of stock returns for banks, savings associations, securities firms and insurance companies. Moreover, I compare the volatility dependence of stock returns for these segments with the introduction of new federal regulation, specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 (Dodd-Frank Act). Regulation of financial markets is very significant for investors in the stock markets, policy-makers, practitioners, and academicians who explore the topic very rigorously. This paper contributes to the field by examining the volatility among stock returns for firms in different segments of the financial services industry. My findings are useful to investors and have significant implication for policy-makers and federal regulators in the United States. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) is the recent federal legislation that was enacted following the 2008-2009 global financial crisis that some have deemed as “the worst financial crisis since the Great Depression”. Regulatory reform of the financial system is an urgent priority as the recent financial crisis exposed some of the fundamental weaknesses in the financial regulatory system of the United States (Wilmarth, 2011). The response of

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