Why Do Banks Issue Equity?

Seminar abstract

Why do banks issues equity? They do so as a strategy for assets expansion.

We find that, relative to the control group, United States SEO banks increased not only in their capital ratios but also deposits and assets in the years post-SEO. The newly raised funds are invested mainly in retail loans. The overall risk is increased and market-to-book value is decreased for post-SEO. 

Our results are note driven by the increase in deposit demand before or after banks SEO, and are robust with alternative placebo-matched samples. Our findings point to risk-taking by banks, and highlight the importance of bank regulations on bank size.

Booking

This is an open event. Please feel free to bring your friends, colleagues and classmates along.

Speaker bio

Frank Hong Liu is a Professor of Banking and Finance at the University of Aberdeen. He was previously a Lecturer and Senior Lecturer at the University of Glasgow and a Research Associate at Bangor University. Frank also holds visiting positions at Stern Business School (part of New York University), Columbia Business School (Columbia University) and Erasmus School of Economics (Erasmus School Rotterdam). 

Before joining academics, Frank worked as a Foreign Exchange Trader in the Bank of China for four years.

Frank's research works have appeared in banking and finance journals including 

• Journal of Corporate Finance 
• Journal of Banking and Finance
• Journal of Financial Stability

His work has featured in the CLS Blue Sky Blog (Columbia Law School on Corporations and the Capital Markets) and BTB TV-channel, Ukraine and other media.

Frank is an expert on

• bank regulations,
• systemic risk,
• the impact of banking on the real economy,
• micro-finance
• security issuance

Frank's recent research focuses on examining how regulation/policy changes may have an unintended consequence on stakeholders. These changes vary from bank regulations, government policy to the financial industries and even policy change on the second-child in China. Frank is interested to examine how people/firms may react to the consequent behaviour of the regulations/policy changes.