Do Depositors Discipline Banks and Did Government Actions During the Recent Crisis Reduce this Discipline? An International Perspective

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Total Pages : 43 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Do Depositors Discipline Banks and Did Government Actions During the Recent Crisis Reduce this Discipline? An International Perspective by : Allen N. Berger

Download or read book Do Depositors Discipline Banks and Did Government Actions During the Recent Crisis Reduce this Discipline? An International Perspective written by Allen N. Berger and published by . This book was released on 2014 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent financial crisis highlights the importance of both regulatory and market discipline. Government reactions to the crisis included expanding deposit insurance coverage and rescuing troubled institutions, including some institutions that might not otherwise be considered too important to fail. These actions may have the unintended consequence of a reduction in market discipline that might otherwise penalize banks for risk-taking behavior. Alternatively, market discipline may have increased during the crisis due to heightened awareness of the risks of bank failures. To address these issues, we first test for the presence of depositor discipline effects in the period leading up to the financial crisis in both the US and the EU. Second, we test whether depositor discipline decreased or increased during the crisis. We find significant depositor discipline prior to the crisis in both the US and EU, but this varies between the US and the EU as well as with banking organization size and with listed versus unlisted status. We also find that depositor discipline mostly decreased during the crisis, except for the case of small US banks.

Dynamic Depositor Discipline in U.S. Banks

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Publisher : International Monetary Fund
ISBN 13 : 1451875401
Total Pages : 35 pages
Book Rating : 4.4/5 (518 download)

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Book Synopsis Dynamic Depositor Discipline in U.S. Banks by : Andrea M. Maechler

Download or read book Dynamic Depositor Discipline in U.S. Banks written by Andrea M. Maechler and published by International Monetary Fund. This book was released on 2003-11-01 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the presence of depositor discipline in the U.S. banking sector. We test whether depositors penalize (discipline) banks for poor performance by withdrawing their uninsured deposits. While focusing on the movements in uninsured deposits, we also account for the possibility that banks may be forced to pay a risk premium in the form of higher interest rates to induce depositors not to withdraw their uninsured deposits. Our results support the existence of depositor discipline: a weak bank may not necessarily be able to stop a deposit drain by raising its uninsured deposit interest rates.

Do Depositors Discipline Banks?

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ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (837 download)

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Book Synopsis Do Depositors Discipline Banks? by : Allen N. Berger

Download or read book Do Depositors Discipline Banks? written by Allen N. Berger and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Do Depositors Punish Banks for Bad Behavior? Market Discipline, Deposit Insurance, and Banking Crises

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Total Pages : pages
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Book Synopsis Do Depositors Punish Banks for Bad Behavior? Market Discipline, Deposit Insurance, and Banking Crises by : Maria Soledad Martinez Peria

Download or read book Do Depositors Punish Banks for Bad Behavior? Market Discipline, Deposit Insurance, and Banking Crises written by Maria Soledad Martinez Peria and published by . This book was released on 2001 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper empirically investigates two issues largely unexplored by the literature on market discipline. We evaluate the interaction between market discipline and deposit insurance and the impact of banking crises on market discipline. We focus on the experiences of Argentina, Chile, and Mexico during the 1980s and 1990s. We find that depositors discipline banks by withdrawing deposits and by requiring higher interest rates. Deposit insurance does not appear to diminish the extent of market discipline. Aggregate shocks affect deposits and interest rates during crises, regardless of bank fundamentals; while investors' responsiveness to bank risk taking increases in the aftermath of crises.

Dynamic Depositor Discipline in U.S. Banks

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ISBN 13 :
Total Pages : 33 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Dynamic Depositor Discipline in U.S. Banks by : Kathleen McDill

Download or read book Dynamic Depositor Discipline in U.S. Banks written by Kathleen McDill and published by . This book was released on 2014 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the presence of depositor discipline in the U.S. banking sector. We test whether depositors penalize (discipline) banks for poor performance by withdrawing their uninsured deposits. While focusing on the movements in uninsured deposits, we also account for the possibility that banks may be forced to pay a risk premium in the form of higher interest rates to induce depositors not to withdraw their uninsured deposits. Our results support the existence of depositor discipline: a weak bank may not necessarily be able to stop a deposit drain by raising its uninsured deposit interest rates.

Dynamic Depositor Discipline in U.S. Banks

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ISBN 13 :
Total Pages : 34 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Dynamic Depositor Discipline in U.S. Banks by : Andrea Maechler

Download or read book Dynamic Depositor Discipline in U.S. Banks written by Andrea Maechler and published by . This book was released on 2006 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the presence of depositor discipline in the U.S. banking sector. We test whether depositors penalize (discipline) banks for poor performance by withdrawing their uninsured deposits. While focusing on the movements in uninsured deposits, we also account for the possibility that banks may be forced to pay a risk premium in the form of higher interest rates to induce depositors not to withdraw their uninsured deposits. Our results support the existence of depositor discipline: a weak bank may not necessarily be able to stop a deposit drain by raising its uninsured deposit interest rates.

Do Depositors Punish Banks for "bad" Behavior?

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ISBN 13 :
Total Pages : 60 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Do Depositors Punish Banks for "bad" Behavior? by : Maria Soledad Martinez Peria

Download or read book Do Depositors Punish Banks for "bad" Behavior? written by Maria Soledad Martinez Peria and published by . This book was released on 1999 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Global Financial Development Report 2019/2020

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Publisher : World Bank Publications
ISBN 13 : 1464814961
Total Pages : 281 pages
Book Rating : 4.4/5 (648 download)

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Book Synopsis Global Financial Development Report 2019/2020 by : World Bank

Download or read book Global Financial Development Report 2019/2020 written by World Bank and published by World Bank Publications. This book was released on 2019-11-22 with total page 281 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over a decade has passed since the collapse of the U.S. investment bank, Lehman Brothers, marked the onset of the largest global economic crisis since the Great Depression. The crisis revealed major shortcomings in market discipline, regulation and supervision, and reopened important policy debates on financial regulation. Since the onset of the crisis, emphasis has been placed on better regulation of banking systems and on enhancing the tools available to supervisory agencies to oversee banks and intervene speedily in case of distress. Drawing on ten years of data and analysis, Global Financial Development Report 2019/2020 provides evidence on the regulatory remedies adopted to prevent future financial troubles, and sheds light on important policy concerns. To what extent are regulatory reforms designed with high-income countries in mind appropriate for developing countries? What has been the impact of reforms on market discipline and bank capital? How should countries balance the political and social demands for a safety net for users of the financial system with potentially severe moral hazard consequences? Are higher capital requirements damaging to the flow of credit? How should capital regulation be designed to improve stability and access? The report provides a synthesis of what we know, as well as areas where more evidence is still needed. Global Financial Development Report 2019/2020 is the fifth in a World Bank series. The accompanying website tracks financial systems in more than 200 economies before, during, and after the global financial crisis (http://www.worldbank.org/en/publication/gfdr) and provides information on how banking systems are regulated and supervised around the world (http://www.worldbank.org/en/research/brief/BRSS).

Market Discipline and Financial Safety Net Design

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Publisher : World Bank Publications
ISBN 13 : 2311540211
Total Pages : 52 pages
Book Rating : 4.3/5 (115 download)

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Book Synopsis Market Discipline and Financial Safety Net Design by : Aslı Demirgüç-Kunt

Download or read book Market Discipline and Financial Safety Net Design written by Aslı Demirgüç-Kunt and published by World Bank Publications. This book was released on 1999 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is difficult to design and implement an effective safety net for banks, because overgenerous protection of banks may introduce a risk-enhancing moral hazard and destabilize the very system it is meant to protect. The safety net that policymakers design must provide the right mix of market and regulatory discipline, enough to protect depositors without unduly undermining market discipline on banks.

Preferred Sources of Market Discipline

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ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.3/5 ( download)

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Book Synopsis Preferred Sources of Market Discipline by : Douglas Darrell Evanoff

Download or read book Preferred Sources of Market Discipline written by Douglas Darrell Evanoff and published by . This book was released on 1992 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Market Discipline Under Systemic Risk

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Publisher : World Bank Publications
ISBN 13 :
Total Pages : 49 pages
Book Rating : 4./5 ( download)

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Book Synopsis Market Discipline Under Systemic Risk by : Eduardo Levy Yeyati

Download or read book Market Discipline Under Systemic Risk written by Eduardo Levy Yeyati and published by World Bank Publications. This book was released on 2004 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Levy-Yeyati, Martinez Peria, and Schmukler show that systemic risk exerts a significant impact on the behavior of depositors, sometimes overshadowing their responses to standard bank fundamentals. Systemic risk can affect market discipline both regardless of and through bank fundamentals. First, worsening systemic conditions can directly threaten the value of deposits by way of dual agency problems. Second, to the extent that banks are exposed to systemic risk, systemic shocks lead to a future deterioration of fundamentals not captured by their current values. Using data from the recent banking crises in Argentina and Uruguay, the authors show that market discipline is indeed quite robust once systemic risk is factored in. As systemic risk increases, the informational content of past fundamentals declines. These episodes also show how few systemic shocks can trigger a run irrespective of ex-ante fundamentals. Overall, the evidence suggests that in emerging economies, the notion of market discipline needs to account for systemic risk. This paper--a product of the Finance Team, Development Research Group--is part of a larger effort in the group to study market discipline"--World Bank web site.

Do Depositors Punish Banks for "bad" Behaviour?

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ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.:/5 (464 download)

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Book Synopsis Do Depositors Punish Banks for "bad" Behaviour? by : Maria Soledad Martinez Peria

Download or read book Do Depositors Punish Banks for "bad" Behaviour? written by Maria Soledad Martinez Peria and published by . This book was released on 1999 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Market Discipline Across Countries and Industries

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Publisher : MIT Press
ISBN 13 : 9780262025751
Total Pages : 472 pages
Book Rating : 4.0/5 (257 download)

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Book Synopsis Market Discipline Across Countries and Industries by : C. E. V. Borio

Download or read book Market Discipline Across Countries and Industries written by C. E. V. Borio and published by MIT Press. This book was released on 2004 with total page 472 pages. Available in PDF, EPUB and Kindle. Book excerpt: Leading academics and policymakers address the theory of market discipline and consider evidence across different industries and countries. The effectiveness of market discipline -- the strong built-in incentives that encourage banks and financial systems to operate soundly and efficiently -- commands much attention today, particularly in light of recent accounting scandals. As government discipline, in the form of regulation, seems to grows less effective as the banking industry and financial markets grow more complex, the role of market discipline becomes increasingly important. In this collection, which grew out of a conference cosponsored by the Federal Reserve Bank of Chicago and the Bank for International Settlements in Basel, Switzerland, a diverse group of academics and policymakers address different aspects of the ability of market discipline to affect corporate behavior and performance. A major purpose of the book is to develop evidence on how market discipline operates across non-government regulated industries and in different countries, how successful it has been, and how it may transfer to a regulated industry. The chapters examine such topics as the theory of market discipline, evidence of market discipline in banking and other industries, evidence of market discipline for countries, the current state of corporate governance, and the interaction of market discipline and public policy.

Depositor Behavior and Market Discipline in Colombia

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Publisher : INTERNATIONAL MONETARY FUND
ISBN 13 : 9781451874983
Total Pages : 0 pages
Book Rating : 4.8/5 (749 download)

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Book Synopsis Depositor Behavior and Market Discipline in Colombia by : Mr.Adolfo Barajas

Download or read book Depositor Behavior and Market Discipline in Colombia written by Mr.Adolfo Barajas and published by INTERNATIONAL MONETARY FUND. This book was released on 2000-12-01 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines how depositors choose among different banks and over time in Colombia, focusing on whether they discipline bank behavior. By controlling for a more comprehensive set of risk/return factors, the study improves upon conventional market discipline tests. Panel data estimations for 1985-99 show that depositors prefer banks with stronger fundamentals, and that banks tend to improve their fundamentals after being “punished” by depositors. Banks with stronger fundamentals benefit from lower interest costs and higher lending rates. Market (or “regulatory”) discipline therefore appears to exist in Colombia, perhaps thanks to certain key design features of the deposit insurance scheme.

Depositor Discipline at Failing Banks

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ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (471 download)

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Book Synopsis Depositor Discipline at Failing Banks by :

Download or read book Depositor Discipline at Failing Banks written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The Federal Reserve Bank of Boston offers the full text of the article entitled "Depositor Discipline at Failing Banks," written by John S. Jordan. The article was published in the March/April 2000 issue of the "New England Economic Review." The text is available in PDF format. Jordan examines the effectiveness of depositor discipline at banks that failed in New England in the early 1990s. Many failing banks increased their use of insured deposits to offset much of the shortfall created by the decline in uninsured deposits.

Market Discipline and Deposit Insurance

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ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Market Discipline and Deposit Insurance by : Ghassan Omet

Download or read book Market Discipline and Deposit Insurance written by Ghassan Omet and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial development, which involves the establishment and expansion of institutions, instruments and markets, plays an important role in economic growth given that they can ameliorate information and transaction costs, facilitate a more efficient mobilization of savings, spread risk and provide liquidity. Moreover, given the high costs of banking crises, regulators always seek the means that promote greater levels of prudence in banks' behavior. Indeed, this can be done by relying on certain regulatory actions (supervision and regulations) and on market discipline. In turn, market discipline relies on private sector agents (equity holders and debt holders) to produce information that assists bank supervisors in recognizing potential banking problems and in implementing remedial measures.The primary objective of this research is to provide answers to two questions. First, do depositors discipline Jordanian, Kuwaiti, Omani, and Saudi banks? Second, does the deposit insurance design have any bearing on market discipline - given the fact that Kuwaiti and Saudi deposits are 100 percent insured explicitly and implicitly respectively, while Jordanian and Omani deposits are insured up to $14,000 and $50,000 respectively.Based on a sample of listed Jordanian, Kuwaiti, Omani, and Saudi banks during the time period 1997-2006, the overall results clearly indicate the absence of market discipline in Kuwait, Oman, and Saudi Arabia. In other words, market discipline is at work only in Jordan.

How Depositors Discipline Banks

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ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (836 download)

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Book Synopsis How Depositors Discipline Banks by :

Download or read book How Depositors Discipline Banks written by and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: