Re-Examining the Role of Market Discipline for Bank Supervision: Evidence from the Subprime Crisis

2011 ◽  
Author(s):  
Ajay A. Palvia ◽  
Dilip K. Patro
Keyword(s):  
Market Discipline ◽  
Subprime Crisis ◽  
Bank Supervision

scholarly journals The Role of Subordinated Debt in Market Discipline: The Case of Emerging Markets

2000 ◽  
Author(s):  
Cem Karacadag ◽  
Animesh Shrivastava
Keyword(s):  
Emerging Markets ◽  
Market Discipline ◽  
Subordinated Debt

Market Discipline in Bank Supervision

2012 ◽  
Author(s):  
Mark J. Flannery
Keyword(s):  
Market Discipline ◽  
Bank Supervision

1. Banks in the Financial System

2018 ◽  
Author(s):  
Ross Cranston ◽  
Emilios Avgouleas ◽  
Kristin van Zweiten ◽  
Theodor van Sante ◽  
Christoper Hare
Keyword(s):  
Financial Stability ◽  
Regulatory Networks ◽  
Financial System ◽  
Capital Allocation ◽  
Bank Supervision ◽  
System P ◽  
The Us ◽  
Regulatory Coordination ◽  
Definition Of

This chapter explains the economic functions and organizational structure of contemporary banking. It first discusses the role of banks in the economy, offering a brief account of the role of the financial system in capital allocation and risk management as well as key bank functions in this respect. It then details the rise and fall of the multifunctional bank in the era of globalization, and the different aspects of the too-big-to-fail bank problem and its possible causes. It explains the international nature of bank regulation and the standard-setting and regulatory coordination provided by key transnational regulatory networks such as the Basel committee on Bank Supervision and the Financial Stability Board; discusses the legal definition of the term ‘bank’ in the US and of ‘credit institution’ under EU legislation; advances a new understanding of what the term ‘bank’ means in the post-2008 era.

Diffusion of crisis signals across the world: evidence from subprime crisis of 2008-2009

2018 ◽  
Vol 13 (2) ◽  
pp. 410-430 ◽  
Author(s):  
Sruthi Rajan ◽  
Shijin Santhakumar
Keyword(s):  
Ordinary Least Squares ◽  
Stock Index ◽  
Subprime Crisis ◽  
Policy Makers ◽  
Content Type ◽  
Crisis Period ◽  
Economic Fundamentals ◽  
The World ◽  
The Impact

Purpose The innovations in fundamentals coupled with noise traders induce co-movement in diverse markets. This co-movement in equity markets which is evidenced higher during the turmoil period influences economic fundamentals of a country dissimilar in nature. The purpose of this paper is to examine whether economic fundamentals or investors’ behavior attributable to disturbances across the world are the rationale behind the crisis transmission, and thereby distinguish fundamental-based contagion from investor-induced contagion. Design/methodology/approach Initially, the study investigates the role of macroeconomic fundamentals and stock returns on crisis occurrence using panel probit estimates. Additionally, ordinary least squares estimates controlling the influence of fundamentals on domestic return capture the discrete country effect measuring the influence of domestic as well as foreign economic fundamentals along with foreign returns on the domestic stock index. Findings The empirical results reveal that foreign country stock index returns are having a significant influence on domestic returns besides a prominent role in crisis occurrence. The binary probit model confirmed the influence of both macroeconomic factors and foreign returns in crisis occurrence. The OLS estimates found evidence for investor-induced contagion in the crisis period where the effects of economic fundamentals are small in comparison to foreign market returns that are mainly dominant in pre- and post-crisis period. Research limitations/implications The propagation of crisis from one market to other would enable the policy makers to make clear regulations at right time to control for the crisis in future. The results can help the policy makers as well as investors in reducing the impact of the crisis in future by clearly monitoring the behavior of the factors under study. Originality/value The current study addresses the role of macro fundamentals and investors influence in crisis propagation. Adopting subprime crisis of 2008-2009 as a reference point and separating the sample period into pre-crisis, crisis and post-crisis period, the study explains how badly the other 30 markets impacted the crisis that emerged in the USA.

scholarly journals The Impact of Market Discipline on Banks’ Capital Adequacy: Evidence From an Emerging Economy

2015 ◽  
Vol 4 (1) ◽  
pp. 61-73 ◽  
Author(s):  
Ayesha Afzal
Keyword(s):  
Perceived Risk ◽  
Banking System ◽  
Empirical Support ◽  
Market Discipline ◽  
Capital Adequacy ◽  
Risk Level ◽  
Bank Capital ◽  
The Cost ◽  
The Impact

This study presents empirical support for the role of market discipline in augmenting bank capital ratios in a competitive banking environment. Using a panel dataset on domestic commercial banks in Pakistan from 2009 to 2014, the study determines if the market penalized banks for any increase in their risk profile through a rise in the cost of raising funds. The results point to a significant relationship between capital adequacy and other risk factors, with the cost of deposits demonstrating how depositors align the required return to the perceived risk level of the bank. These findings have important implications for policymakers as market discipline could complement the role of regulators, which would eventually lower the cost of supervision. Moreover, the focus of international reforms as seen through the implementation of Basel III should continue to be on developing a more competitive and transparent banking system.

scholarly journals The Role of Subordinated Debt in Market Discipline: The Case of Emerging Markets

2000 ◽  
Vol 00 (215) ◽  
pp. 1 ◽  
Author(s):  
Cem Karacadag ◽  
Animesh Shrivastava ◽  
◽  
Keyword(s):  
Emerging Markets ◽  
Market Discipline ◽  
Subordinated Debt

scholarly journals The Role of Subordinated Debt in Market Discipline: The Case of Emerging Markets

2000 ◽  
Author(s):  
Cem Karacadag ◽  
animesh anu shrivastava
Keyword(s):  
Emerging Markets ◽  
Market Discipline ◽  
Subordinated Debt
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