Examining the Global Ripple Effects: Analyzing the Impact of First Republic Bank’s Fall on Different Financial Market

Abstract

The collapse of First Republic Bank, the largest bank failure in the United States since the 2008 financial crisis, had significant ripple effects on various sectors within the global financial system. This research study examines the interconnectedness and vulnerabilities of the financial markets by analyzing the impact of the bank's fall on top United States banks, United States equity exchanges, global equity indices, and prominent cryptocurrencies. Using the event study methodology, we calculate abnormal returns and Cumulative Abnormal Returns (CARs) over a specified event window. The findings highlight the widespread and significant abnormal returns observed across sectors, emphasizing the systemic risks associated with bank failures. The results also demonstrate the decline in stock prices and investor confidence in the banking sector following the collapse. The study contributes to a more comprehensive understanding of the interconnectedness and spillover effects in the aftermath of a significant banking event, providing valuable insights into the global financial landscape's broader implications and risks.