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Market Discipline and Bank Charter Value: The Case of Two Safe Banking Industries

Author

Listed:
  • Mamiza Haq

    (UQ Business School. The University of Queensland. Queensland 4072, Australia)

  • Amine Tarazi

    () (LAPE - Laboratoire d'Analyse et de Prospective Economique - UNILIM - Université de Limoges - IR SHS UNILIM - Institut Sciences de l'Homme et de la Société)

  • Necmi Avkiran

    (UQ Business School. The University of Queensland. Queensland 4072, Australia.)

  • Ana Rosa Fonceca

    (Department of Business Administration, School of Economics and Business, University of Oviedo, Avenida del Cristo, Oviedo, Spain)

Abstract

This paper analyses the relationship between market discipline and bank charter value using a panel dataset of publicly-listed domestic banks in Australia and Canada over the 1995-2011 periods, with particular focus on the 2007/2008 global financial crisis (GFC). Overall, our results show a positive relationship between market discipline and bank charter value, although this has reduced in the post-GFC period. Furthermore, our findings reveal that in the presence of market discipline, bank capital, contingent liabilities, and non-interest income are important sources of charter value. These findings have important policy implications related to bank safety and soundness. The results are robust to model specification.

Suggested Citation

  • Mamiza Haq & Amine Tarazi & Necmi Avkiran & Ana Rosa Fonceca, 2013. "Market Discipline and Bank Charter Value: The Case of Two Safe Banking Industries," Working Papers hal-00955135, HAL.
  • Handle: RePEc:hal:wpaper:hal-00955135 Note: View the original document on HAL open archive server: https://hal-unilim.archives-ouvertes.fr/hal-00955135
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:riibaf:v:42:y:2017:i:c:p:1208-1218 is not listed on IDEAS
    2. Soedarmono, Wahyoe & Sitorus, Djauhari & Tarazi, Amine, 2017. "Abnormal loan growth, credit information sharing and systemic risk in Asian banks," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1208-1218.
    3. Yassine Bakkar & Clovis Rugemintwari & Amine Tarazi, 2017. "Charter value and bank stability before and after the global financial crisis of 2007-2008 Charter value and bank stability before and after the global financial crisis of 2007-2008," Working Papers hal-01337601, HAL.

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