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Charter Value and Risk-taking: Evidence from Indian Banks

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  • Saibal, Ghosh

Abstract

The article examines the determinants of banks’ charter value and its disciplining effect on bank risk-taking since the mid-1990s. The analysis indicates that deposit and loan market concentration exert a significant effect on charter value, suggestive of a strong link between competition and charter value. Among the traditional banking activities, bank size and efficiency are found to be important determinants of charter value. The disciplining effect of charter value is robust across several measures on bank risk.

Suggested Citation

  • Saibal, Ghosh, 2009. "Charter Value and Risk-taking: Evidence from Indian Banks," MPRA Paper 19543, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:19543
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    References listed on IDEAS

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    13. Park, Sangkyun & Peristiani, Stavros, 1998. "Market Discipline by Thrift Depositors," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(3), pages 347-364, August.
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    Citations

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    Cited by:

    1. Niu, Jijun, 2012. "An empirical analysis of the relation between bank charter value and risk taking," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(3), pages 298-304.
    2. Sanjukta Sarkar & Rudra Sensarma, 2016. "The relationship between competition and risk-taking behaviour of Indian banks," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 8(1), pages 95-119, April.
    3. Juha-Pekka Niinimäki, 2014. "Relationship Lending, Bank Competition and Financial Stability," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 8(3), pages 102-124, December.
    4. Udhayakumar, A. & Charles, V. & Kumar, Mukesh, 2011. "Stochastic simulation based genetic algorithm for chance constrained data envelopment analysis problems," Omega, Elsevier, vol. 39(4), pages 387-397, August.

    More about this item

    Keywords

    banking; charter value; risk-taking; capital buffer; prudential regulation; India;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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