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.
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.
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.
Download or read book The Impact of Explicit Deposit Insurance on Market Discipline written by Vasso P. Ioannidou and published by . This book was released on 2006 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
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).
Download or read book Market Discipline and Financial Safety Net Design written by Asli Demirgüç-Kunt and published by . This book was released on 2016 with total page 44 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.There has been little empirical work on the effectiveness of safety nets designed for banks, for lack of data on safety net design across countries. Demirguuml;ccedil;-Kunt and Huizinga examine cross-country data on bank-level interest expense and deposit growth for evidence of market discipline in individual countries. In addition, using cross-country information on deposit insurance systems, they investigate the impact of explicit deposit insurance (and its key features) on bank interest rates and market discipline.They find that:middot; Many countries retain some degree of market discipline, regardless of the type of safety net.middot; The existence of explicit deposit insurance lowers banks' interest expenses and makes interest payments less sensitive to bank risk factors, especially bank liquidity.middot; Higher explicit coverage, broader coverage, and the existence of an earmarked insurance fund increase required-deposit rates and reduce market discipline.middot; Government provision of funds lowers deposit rates but also reduces market discipline.middot; Private (especially joint) management of insurance schemes lowers deposit rates and improves market discipline.This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to study deposit insurance. The authors may be contacted at [email protected] or [email protected].
Download or read book The Effect of Deposit Insurance on Market Discipline written by Alexei Karas and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We explore how the introduction of explicit deposit insurance affects deposit flows into and out of banks of varying risk levels. Using evidence from a natural experiment in Russia, we employ a difference-in-difference estimator to isolate the change in the deposit flows of a newly insured group (households) relative to an uninsured “control” group (firms). This approach improves on earlier studies seeking to identify the effect of deposit insurance on market discipline. We find that the relative sensitivity of households to bank capitalization diminished markedly with the introduction of an insurance program covering their deposits. This was not true for firms, however. We then show the finding is not an artifact of the two groups responding differently to a minor banking crisis that arose at roughly the same time.
Download or read book Market Discipline written by Mr.Timothy D. Lane and published by International Monetary Fund. This book was released on 1992-06-01 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Under what circumstances can market forces prevent unsustainable borrowing? Effective market discipline requires that capital markets be open, that; information on the borrower’s existing liabilities be readily available, that no bailout be anticipated, and that the borrower respond to market signals. This paper explores the implications of these conditions, and reviews some relevant empirical evidence.
Download or read book Modis written by Ms.Edda Zoli and published by International Monetary Fund. This book was released on 2002-12-01 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper argues that an optimal deposit insurance scheme would allow the level of insurance coverage to be determined by the market. Based on this principle, the paper proposes an insurance scheme that minimizes distortions and embodies fairness and credibility, two essential characteristics of a viable and effective deposit insurance scheme. Using a simple model for the determination of the optimal level of insurance coverage, it is shown that the optimal coverage is higher for developing compared to developed countries; a condition that is broadly satisfied by prevailing deposit insurance practices around the world.
Download or read book Does Deposit Insurance Diminish Market Discipline written by Andreas Grunwald and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: As a consequence of the run on the British bank Northern Rock, the European Parliament's Economic and Monetary Affairs Committee agreed on raising the deposit insurance coverage from 20,000 to 50,000 Euro as of 30 June 2009 to restore confidence among depositors in the banking system. In this thesis the differences-in-differences methodology is employed to find out whether the implementation of this rise of coverage limit in Bulgaria diminished market discipline. The results suggest that holders of deposits in domestic currency reduced their efforts to discipline banks subsequently to the rise of the deposit insurance coverage in November 2008, while the holders of Euro-deposits increased their efforts. Holders of Euro-deposits impose more discipline on banks after November 2008 due to the failure of the Lehman Brothers and to bailouts of large banks in the United States of America and Europe. The former event made depositors more aware of bank risk taking and the latter event made them more conscious of potential too-big-to-fail guarantees. These events also impact holders of domestic currency deposits, but in a less pronounced manner. A reasonable explanation for behavioral discrepancies between holders of domestic currency and holders of Euro-deposits could be the lower level of education of domestic-currency holders.
Download or read book Deposit Insurance Market Discipline and Bank Risk written by Alexei Karas and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
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.
Download or read book Market Discipline and Deposit Insurance in Russia written by and published by . This book was released on 2008 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Market Discipline in Banking Reconsidered written by Daniel M. Covitz and published by . This book was released on 2002 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Maintaining Financial Stability in Times of Risk and Uncertainty written by Behl, Abhishek and published by IGI Global. This book was released on 2018-12-04 with total page 377 pages. Available in PDF, EPUB and Kindle. Book excerpt: Risks and uncertainties?market, financial, operational, social, humanitarian, environmental, and institutional?are the inherent realities of the modern world. Stock market crashes, demonetization of currency, and climate change constitute just a few examples that can adversely impact financial institutions across the globe. To mitigate these risks and avoid a financial crisis, a better understanding of how the economy responds to uncertainties is needed. Maintaining Financial Stability in Times of Risk and Uncertainty is an essential reference source that discusses how risks and uncertainties affect the financial stability and security of individuals and institutions, as well as probable solutions to mitigate risk and achieve financial resilience under uncertainty. Featuring research on topics such as financial fraud, insurance ombudsman, and Knightian uncertainty, this book is developed for researchers, academicians, policymakers, students, and scholars.
Download or read book Deposit Insurance written by Rita Carisano and published by Dartmouth Publishing Company. This book was released on 1992 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt: The salience of deposit insurance has increased enormously in recent years as a result of the thrifts crisis in the USA and its proposed introduction to the European Community.
Download or read book Market Discipline in the Thrift Industry written by Benjamin C. Esty and published by . This book was released on 1991 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt:
