IDEAS home Printed from https://ideas.repec.org/p/fip/fedlwp/1994-023.html

Market discipline by depositors: evidence from reduced form equations

Author

Listed:
  • Sangkyun Park

Abstract

This paper examines the effects of the estimated probability of bank failure on the growth rates of large time deposits and interest rates on those deposits. While riskier banks paid higher interest rates, they attracted less large time deposits in the second half of the 1980s. These results indicate that risky banks faced unfavorable supply schedules of large time deposits and, hence, support the presence of market discipline by large time depositors. The empirical analysis also considers the effects of bank size, but fails to find evidence that depositors preferred large banks.

Suggested Citation

  • Sangkyun Park, 1994. "Market discipline by depositors: evidence from reduced form equations," Working Papers 1994-023, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:1994-023
    DOI: 10.20955/wp.1994.023
    as

    Download full text from publisher

    File URL: https://fraser.stlouisfed.org/title/working-papers-federal-reserve-bank-st-louis-9029/market-discipline-depositors-evidence-reduced-form-equations-715971
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.20955/wp.1994.023?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Robert B. Avery & Gerald A. Hanweck, 1984. "A dynamic analysis of bank failures," Research Papers in Banking and Financial Economics 74, Board of Governors of the Federal Reserve System (U.S.).
    2. Christopher M. James, 1987. "Off-balance sheet banking," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue sep18.
    3. Martin, Daniel, 1977. "Early warning of bank failure : A logit regression approach," Journal of Banking & Finance, Elsevier, vol. 1(3), pages 249-276, November.
    4. Herbert L. Baer & Elijah Brewer, 1986. "Uninsured deposits as a source of market discipline: some new evidence," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 10(Sep), pages 23-31.
    5. Avery, Robert B & Belton, Terrence M & Goldberg, Michael A, 1988. "Market Discipline in Regulating Bank Risk: New Evidence from the Capital Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(4), pages 597-610, November.
    6. Gary Whalen, 1991. "A proportional hazards model of bank failure: an examination of its usefulness as an early warning tool," Economic Review, Federal Reserve Bank of Cleveland, vol. 27(Q I), pages 21-31.
    7. James R. Barth & R. Dan Brumbaugh & Daniel Sauerhaft & George Wang, 1985. "Thrift institution failures: causes and policy issues," Proceedings 68, Federal Reserve Bank of Chicago.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Helder Mendonça & Renato Villela Loures, 2009. "Market discipline in the Brazilian banking industry: an analysis for the subordinated debt holders," Journal of Regulatory Economics, Springer, vol. 36(3), pages 286-307, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Park, Sangkyun, 1995. "Market discipline by depositors: Evidence from reduced-form equations," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(35), pages 497-514.
    2. Eugene A. Ludwig, 1996. "Bank management structure obsolescence," Proceedings 489, Federal Reserve Bank of Chicago.
    3. Diana Hancock, 1996. "Measuring the efficiency of financial institutions: the importance of choosing a frontier," Proceedings 502, Federal Reserve Bank of Chicago.
    4. Jane W. D'Artista, 1996. "What should regulators do in the age of money managers?," Proceedings 488, Federal Reserve Bank of Chicago.
    5. Edward W. Kelley, 1996. "The why, what, and how of bank regulation," Proceedings 487, Federal Reserve Bank of Chicago.
    6. Mark S. Carey & Mitchell A. Post & Steven A. Sharpe, 1996. "Does lending by banks and finance companies differ?," Proceedings 508, Federal Reserve Bank of Chicago.
    7. J. S. Butler & Barry Schachter, 1996. "Improving value-at-risk estimates by combining kernel estimation," Proceedings 513, Federal Reserve Bank of Chicago.
    8. Robert S. Chirinko & Julie Ann Elston, 1996. "Banking relationships in Germany: empirical results and policy implications," Research Working Paper 96-05, Federal Reserve Bank of Kansas City.
    9. William J. Hanley & Karen McCann & James T. Moser, 1996. "Reconsidering regulatory standards for clearing and settlement systems," Proceedings 517, Federal Reserve Bank of Chicago.
    10. Gillian Garcia & Matthew Saal, 1996. "Internal governance, market discipline, and regulatory restraint: international evidence," Proceedings 491, Federal Reserve Bank of Chicago.
    11. Gerald P. Dwyer & Iftekhar Hasan, 1996. "Suspension of payments and bank failures," Proceedings 515, Federal Reserve Bank of Chicago.
    12. James A. Leach, 1996. "The merits of Glass-Steagall reform," Proceedings 485, Federal Reserve Bank of Chicago.
    13. Edward J. Kane, 1996. "Foundations of financial regulation," Proceedings 511, Federal Reserve Bank of Chicago.
    14. Darryll Hendricks, 1996. "Evaluation of value-at-risk models using historical data," Proceedings 512, Federal Reserve Bank of Chicago.
    15. John D. Hawke, 1996. "Bank structure and competition and pending legislation," Proceedings 484, Federal Reserve Bank of Chicago.
    16. Verne G. Istock, 1996. "The inevitability of consolidation," Proceedings 498, Federal Reserve Bank of Chicago.
    17. Gregory R. Duffee, 1996. "Rethinking risk management for banks: lessons from credit derivatives," Proceedings 514, Federal Reserve Bank of Chicago.
    18. Joel F. Houston & Christopher M. James, 1996. "Banking relationships, financial constraints, and investment: are bank- dependent borrowers more financially constrained?," Proceedings 506, Federal Reserve Bank of Chicago.
    19. Douglas O. Cook & Arthur Hogan & Robert Kieschnick, 1996. "The effect of regulatory oversight on internal and external mechanisms to change corporate control," Proceedings 496, Federal Reserve Bank of Chicago.
    20. Stephen Brobeck, 1996. "Bank consolidation and the consumer," Proceedings 499, Federal Reserve Bank of Chicago.

    More about this item

    Keywords

    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedlwp:1994-023. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Scott St. Louis (email available below). General contact details of provider: https://edirc.repec.org/data/frbslus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.