Can bank supervisors rely on market data? A critical assessment from a Swiss perspective
AbstractMarket data, such as bond spreads or equity price volatility, are a complementary source to bank supervisory information. In Switzerland, meaningful market data are available for a number of banks which constitute a major part of the banking system. Notwithstanding some limitations (biases due to state guarantee for cantonal banks and potential "too-big-to-fail" expectations for big banks) these market data are likely to play a supervisory role in the future. However, once the market expects supervisors to react to market data, these data become endogenous. This may jeopardize the very potential of market data to serve as policy guides.
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Bibliographic InfoPaper provided by Swiss National Bank in its series Working Papers with number 2006-08.
Length: 35 pages
Date of creation: 2006
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- Urs W. Birchler & Matteo Facchinetti, 2007. "Can Bank Supervisors Rely on Market Data? A Critical Assessment from a Swiss Perspective," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 143(II), pages 95-132, June.
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
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