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Market Discipline

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  • Timothy D. Lane

    (International Monetary Fund)

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    Abstract

    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.

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal Staff Papers - International Monetary Fund.

    Volume (Year): 40 (1993)
    Issue (Month): 1 (March)
    Pages: 53-88

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    Handle: RePEc:pal:imfstp:v:40:y:1993:i:1:p:53-88

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    Cited by:
    1. Llewellyn, David T. & Mayes , David G., 2003. "The role of market discipline in handling problem banks," Research Discussion Papers, Bank of Finland 21/2003, Bank of Finland.
    2. Shah, Anwar, 2005. "Fiscal decentralization and fiscal performance," Policy Research Working Paper Series, The World Bank 3786, The World Bank.
    3. David T. Llewellyn, 2001. "A regulatory regime for financial stability," Working Papers, Oesterreichische Nationalbank (Austrian Central Bank) 48, Oesterreichische Nationalbank (Austrian Central Bank).
    4. Joao do Carmo Oliveira & Jorge Martinez-Vasquez, 2001. "Czech Republic : Intergovernmental Fiscal Relations in the Transition," World Bank Publications, The World Bank, number 14027, August.
    5. Heinemann, Friedrich, 1999. "Does globalization restrict budgetary autonomy? A multidimensional approach," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 99-29, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. David VanHoose, 2007. "Market Discipline and Supervisory Discretion in Banking: Reinforcing or Conflicting Pillars of Basel II?," NFI Working Papers, Indiana State University, Scott College of Business, Networks Financial Institute 2007-WP-06, Indiana State University, Scott College of Business, Networks Financial Institute.
    7. David VanHoose, 2007. "Evaluating the Policy Implications of the Other Two Pillars of Basel II," NFI Policy Briefs, Indiana State University, Scott College of Business, Networks Financial Institute 2007-PB-08, Indiana State University, Scott College of Business, Networks Financial Institute.
    8. Selçuk Caner & Süheyla Özyıldırım & A. Ungan, 2012. "How Sensitive Are Bank Managers to Shareholder Value?," Journal of Financial Services Research, Springer, Springer, vol. 42(3), pages 187-205, December.
    9. Jensen, Svend Erik Hougaard & Jensen, Lars Grue, 1995. "Debt, deficits and transition to EMU: A small country analysis," European Journal of Political Economy, Elsevier, Elsevier, vol. 11(1), pages 3-25, March.
    10. Landon, Stuart & Smith, Constance E., 2007. "Government debt spillovers in a monetary union," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 18(2), pages 135-154, August.
    11. repec:onb:oenbwp:y::i:48:b:1 is not listed on IDEAS
    12. Heinemann, Friedrich, 1994. "Verschuldungsanreize in der Wirtschafts- und Währungsunion," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 94-02, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    13. Philipp Paulus, 2004. "The fiscal stability impact of monetary unions - looking beneath the Stability Pact debate," Otto-Wolff-Institut Discussion Paper Series, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland 05/2004, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
    14. Friedrich Heinemann, 2000. "Does globalization restrict budgetary autonomy?," Intereconomics: Review of European Economic Policy, Springer, Springer, vol. 35(6), pages 288-298, November.
    15. Heinemann, Friedrich & Winschel, Viktor, 2001. "Public deficits and borrowing costs: the missing half of market discipline," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 01-16, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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