Market discipline, disclosure and moral hazard in banking

Journal of Financial Intermediation

Volumn 15, Issue 3, 2006, Pages 332-361

  Nier, Erlend ^a   Baumann, Ursel ^a  

^a BANK OF ENGLAND   (United Kingdom)

Author keywords

Competition; Disclosure; Financial institutions; Market discipline; Moral hazard

Indexed keywords

EID: 33646856863     PISSN: 10429573     EISSN: 10960473     Source Type: Journal    
DOI: 10.1016/j.jfi.2006.03.001     Document Type: Article

References (53)

1. Alfon, I., Argimon, I., Bascunana-Ambros, P., 2004. What determines how much capital is held by UK banks and building societies? Occasional paper No 22. UK Financial Services Authority
2. Amir E., Harris T.S., and Venuti E.K. A comparison of the value-relevance of US versus non-US GAAP accounting measures using Form 20-F reconciliations. J. Acc. Res. 31 Supplement (1993) 230-264
3. Ayuso J., Perez D., and Saurina J. Are capital buffers procyclical? Evidence from Spanish panel data. J. Finan. Intermediation 13 (2004) 249-264
4. Barth J.R., Caprio G., and Levine R. The Regulation and Supervision of Banks Around the World: A New Database (2001), The World Bank
5. Barth J.R., Caprio G., and Levine R. Bank regulation and supervision: What works best?. J. Finan. Intermediation 13 2 (2004) 205-248
6. Basel Committee on Banking Supervision, 2003. The New Basel Capital Accord. Consultative document. Bank for International Settlements
7. Baumann U., and Nier E.W. Disclosure, volatility, and transparency: An empirical investigation into the value of bank disclosure. Fed. Reserve Bank New York Econ. Pol. Rev. 10 2 (2004) 31-46
8. Beck T., Demirgüç-Kunt A., and Levine R. A New Database on Financial Development and Structure (1999), The World Bank
9. Beck, T., Demirgüç-Kunt, A., Levine, R., 2005. Bank Concentration and Fragility: Impact and Mechanics. Working paper 11500. NBER
10. Berger A.N. Market discipline in banking. Proceedings of a Conference on Bank Structure and Competition (1991), Federal Reserve Bank of Chicago pp. 419-437
11. Berger A.N. The relationship between capital and earnings in banking. J. Money, Credit, Banking 27 2 (1995) 432-456
12. Berger A.N., and Udell G.F. The institutional memory hypothesis and the procyclicality of bank lending behaviour. J. Finan. Intermediation 13 4 (2004) 458-495
13. Bliss R.R., and Flannery M.J. Market discipline in the governance of US bank holding companies: Monitoring versus influence. Europ. Finance Rev. 6 (2002) 419-437
14. Blum J. Subordinated debt, market discipline, and banks' risk taking. J. Banking Finance 26 7 (2002) 1427-1441
15. Boot A.W., and Schmeits A. Marked discipline and incentive problems in conglomerate firms with applications to banking. J. Finan. Intermediation 9 (2000) 240-273
16. Borio C., Furfine C., and Lowe P. Procyclicality of the financial system and financial stability: Issues and policy options. BIS Pap. 1 (2001)
17. Botosan C.A. Disclosure level and the cost of equity capital. Acc. Rev. 72 3 (1997) 323-349
18. Bushman R.M., and Smith A.J. Transparency, financial accounting information and corporate governance. Fed. Reserve Bank New York Econ. Pol. Rev. 9 1 (2003) 65-87
19. Calomiris C.W., and Wilson B. Bank capital and portfolio management: The 1930' 'Capital Crunch' and scramble to shed risk. J. Bus. 77 3 (2004) 421-455
20. Caprio G., and Klingebiel D. Episodes of Systemic and Borderline Financial Crises (2003), The World Bank
21. Cordella, T., Yeyati, E.L., 1998. Public disclosure and bank failures. Discussion paper No. 1886. CEPR
22. Cordella T., and Yeyati E.L. Bank bailouts: Moral hazard vs. value effect. J. Finan. Intermediation 12 (2003) 300-330
23. Covitz D.M., Hancock D., and Myron K.W. A Reconsideration of the risk sensitivity of US banking organization subordinated debt spreads: A sample selection approach. Fed. Reserve Bank New York Econ. Pol. Rev. 10 2 (2004) 73-95
24. Demirgüç-Kunt A., and Detragiache E. Does deposit insurance increase banking system stability? An empirical investigation. J. Monet. Econ. 49 7 (2002) 1373-1406
25. Demirgüç-Kunt A., and Sobaci T. Deposit Insurance Around the World: A Data Base (2000), The World Bank
26. Ellis D.M., and Flannery M.J. Does the Debt Market Assess Large Banks' Risk? Time series evidence from money center CDs. J. Monet. Econ. 30 3 (1992) 481-502
27. Evanoff D.D., and Wall L.D. Subordinated debt as bank capital: A proposal for regulatory reform. Fed. Reserve Bank Chicago Econ. Perspect 24 2 (2000) 40-53
28. Evanoff D.D., and Wall L.D. The role of subordinated debt in bank safety and soundness regulation. Proceedings to the 36th Annual Conference on Bank Structure and Competition (2000), Federal Reserve Bank of Chicago
29. Flannery M.J. Using market information in prudential bank supervision: A review of the US empirical evidence. J. Money, Credit, Banking 30 3 (1998) 273-305
30. Flannery, M., Rangan, K., 2004. What caused the bank capital build-up of the 1990s? Working paper No. 2004-03-03. FDIC Center for Financial Research
31. Freixas, X., 1999. Optimal bail out policy, conditionality and creative ambiguity, financial markets group. Discussion paper No. 327. London School of Economics
32. Gordy M.B. A risk-factor model foundation for ratings-based bank capital rules. J. Finan. Intermediation 12 (2003) 199-232
33. Gropp R., and Vesala J. Deposit insurance, moral hazard and market monitoring. J. Finance 8 4 (2004) 571-602
34. Gropp, R., Vesala, J., Vulpes, G., 2002. Equity and bond market signals as leading indicators of bank fragility. Working paper Nr. 150. European Central Bank
35. Hamalainen, P., Hall, J.B.M., Howcroft, B., 2001. A framework for implementing market discipline in financial regulatory design. Research paper No. 147/01. Loughborough University Banking Centre
36. Hovakimian A., Kane E.J., and Laeven L. How country and safety-net characteristics affect bank risk-shifting. J. Finan. Services Res. 23 3 (2003) 177-204
37. Keeley M.C. Deposit insurance, risk and market power in banking. Amer. Econ. Rev. 80 (1990) 1183-2000
38. Kliger D., and Sarig O. The information value of bond ratings. J. Finance 55 6 (2000) 2879-2902
39. La Porta R., Lopez-de-Silanes F., Shleifer A., and Vishny R. Law and finance. J. Public Econ. 106 (1998) 1113-1155
40. Leutz C., and Verrecchia R.E. The economic consequences of increased disclosure. J. Acc. Res. 38 (2000) 92-124
41. Lindquist, K.G., 2003. Banks buffer capital: How important is risk? Norges Bank. Mimeo
42. Marston C.L., and Shrives P.J. The use of disclosure indices in accounting research: A review article. British Acc. Rev. 23 (1991) 195-210
43. Matutes C., and Vives X. Imperfect competition, risk taking and regulation in banking. Europ. Econ. Rev. 44 (2000) 1-34
44. Merton R.C. An analytic derivation of the cost of deposit insurance loan guarantees. J. Banking Finance 1 (1977) 3-11
45. Myers S., and Majluf N.S. Corporate financing and investment decisions when firms have information investors do not have. J. Finan. Econ. 13 (1984) 187-221
46. Nier E.W. Bank stability and transparency. J. Finan. Stability 1 (2005) 342-354
47. Rochet J.C. Capital requirements and the behaviour of commercial banks. Europ. Econ. Rev. 36 (1992) 1137-1178
48. Saunders A., Strock E., and Travlos N.G. Ownership structure, deregulation, and bank risk taking. J. Finance 45 2 (1990) 643-654
49. Sengupta P. Corporate disclosure quality and the cost of debt. Acc. Rev. 73 4 (1998) 459-474
50. Shrieves R.E., and Dahl D. The relationship between risk and capital in commercial banks. J. Banking Finance 16 (1992) 439-457
51. Suarez, J., 1994. Closure rules, market power and risk taking in a dynamic model of bank behaviour. DP No. 196. LSE Financial Markets Group
52. Sironi A. Testing for market discipline in the European banking industry: Evidence from subordinated debt issues. J. Money, Credit, Banking 35 3 (2003) 443-472
53. Wooldridge J.M. Econometric Analysis of Cross Section and Panel Data (2002), MIT Press