The impact of Credit Suisse takeover on Indian banking and financial services sector stocks: an event study analysis
ISSN: 0144-3585
Article publication date: 26 September 2023
Issue publication date: 8 May 2024
Abstract
Purpose
The present study aims to comprehensively examine the impact of the Union Bank of Switzerland (UBS) takeover of Credit Suisse on the banking and financial services sector in the Indian stock market. To fully comprehend the impact of the event, the study separately investigates the response of private sector banks, public sector banks, overall banking companies and financial services companies to the takeover of the second-largest financial institution in Switzerland.
Design/methodology/approach
The study employs event study methodology, using the market model, to analyze the event's impact on Indian banking and financial services sector stocks. The data consists of daily closing prices of companies included in the Nifty Private Bank Index, Nifty PSU Bank Index, Nifty Bank Index and Nifty Financial Services Index from the National Stock Exchange (NSE). Furthermore, cross-sectional regression analysis has been conducted to explore the factors that drive abnormal returns.
Findings
The empirical findings of the study suggest the event had a heterogeneous impact on the stock prices of Indian banks and financial services companies. While public sector banks experienced a significant negative impact on select days within the event window, the overall Indian banking sector and financial services companies also witnessed notable declines. In contrast, Indian private sector banks were relatively resilient, exhibiting minimal effects. However, the cumulative effect is found to be insignificant for all four categories across different event windows. The study also observed that the cumulative abnormal returns (CARs) were significantly influenced by certain variables during different event windows.
Originality/value
To the best of the authors' knowledge, the present study is the earliest attempt that investigates the impact of the UBS takeover of Credit Suisse on the Indian banking and financial services sector using event study methodology and cross-sectional regression model.
Keywords
Acknowledgements
The authors would like to express their sincere appreciation to the editor and the anonymous reviewers for their valuable feedback and meticulous review. Their expertise and thoroughness significantly improved the quality of this paper. Authors are grateful for their time and dedication to ensuring the rigor and clarity of their work.
Citation
Goyal, P. and Soni, P. (2024), "The impact of Credit Suisse takeover on Indian banking and financial services sector stocks: an event study analysis", Journal of Economic Studies, Vol. 51 No. 4, pp. 879-894. https://doi.org/10.1108/JES-06-2023-0316
Publisher
:Emerald Publishing Limited
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