The Effect of Bank Subordinated Debt Yields on Market Discipline Leading Up to the Financial Crisis

2012 ◽  
Author(s):  
Kevin Lee ◽  
Scott Miller ◽  
Timothy J. Yeager
Keyword(s):  
Financial Crisis ◽  
Market Discipline ◽  
Subordinated Debt

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

Market Discipline and Bank Subordinated Debt: Note

1990 ◽  
Vol 22 (1) ◽  
pp. 119 ◽  
Author(s):  
Gary Gorton ◽  
Anthony M. Santomero
Keyword(s):  
Market Discipline ◽  
Subordinated Debt

scholarly journals Bank Leverage and Regulatory Regimes: Evidence from the Great Depression and Great Recession

2016 ◽  
Vol 106 (5) ◽  
pp. 538-542 ◽  
Author(s):  
Christoffer Koch ◽  
Gary Richardson ◽  
Patrick Van Horn
Keyword(s):  
Financial Crisis ◽  
Great Depression ◽  
Great Recession ◽  
Commercial Banks ◽  
Limited Liability ◽  
Capital Requirements ◽  
Market Discipline ◽  
Too Big To Fail ◽  
The Great Recession ◽  
The Great Depression

In the boom before the Great Depression, capital requirements for commercial banks were low and fixed. Bankers faced double liability. Failing banks were not bailed out. During the boom before the Great Recession, capital requirements were proportional to risk-weighted assets. Bankers faced limited liability. Banks deemed too big to fail received bailouts. During the 1920s, the largest banks increased capital levels as asset prices rose. During the boom from 2002 to 2007, the largest institutions kept capital levels near regulatory minimums. Our results suggest more market discipline would have induced the largest U.S. banks to hold greater capital buffers prior to the financial crisis of 2008.

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