Deregulation and Risk |
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| Authors: | Elias Semaan Pamela Peterson Drake |
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| Affiliation: | Elias Semaan is an Assistant Professor of Finance and Pamela Peterson Drake is a Professor of Finance, both at James Madison University, Harrisonburg, Virginia 22807. |
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| Abstract: | The recent market turmoil has brought attention to how deregulation of the financial sector may affect risk. The purpose of our study is to examine the market's perception of risk associated with deregulation. We accomplish this by decomposing security risk around deregulation into systematic and unsystematic risk. We examine deregulation of several industries and find a consistent pattern of risk adjustment to deregulation, whereby the increase in security risk is temporary and largely unsystematic. |
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