@article{321ad160f1fb4c289a99b7fae9001cb3,
title = "The market valuation effects of reserve regulation",
abstract = "We demonstrate that the financial market's reaction to changes in reserve regulation implies that reserve requirements are an excise tax on banking activities. Changes in reserve requirements do not influence yields on Treasury securities or returns on broad-based portfolios of nonfinancial stocks and thus do not impound new information about monetary policy. Moreover, changes in reserve requirements have an impact on nonbank financial firms that is opposite in sign to that of banks. This suggests that reserve requirements shift the locus of some financial activities from the banking sector to the nonbank sector of the financial system.",
author = "Slovin, {Myron B.} and Marie Sushka and Bendeck, {Yvette M.}",
note = "Funding Information: We developa portfolio of ten major firms that are publicly tradeda nd that offer a range of financial servicest hat are close substitutesfo r the activities carried out in the bankings ector.T he ten firms that compriset his portfolio are: Aetna Life and Casualty,A merican Express,A VCO, Baldwin United, Beneficial Corporation, Dreyfus, Walter E. Heller International,H ousehold International,M errill Lynch, and U.S. Trust Company.S ince thesef irms are not regulatedb y the centralb ank, an increasein reserver equirementssh ould have no impacto n the shareholdevr alueo f thesef irmsif the serviceso f these firms are not substitutesfo r thosep rovidedb y the bankingi ndustry.I f they are close substitutesh, oweverp, ositiver eturnss houlda ccruet o the shareholders of thesen onbanksi n responset o an increasein the reserver equirements applied to banks as transactionsa re shifteda way from banks to theseo ther financial firms.",
year = "1990",
month = jan,
doi = "10.1016/0304-3932(90)90041-2",
language = "English (US)",
volume = "25",
pages = "3--19",
journal = "Journal of Monetary Economics",
issn = "0304-3932",
publisher = "Elsevier",
number = "1",
}