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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/27033

Title: Bank Management and Market Discipline
Authors: Landskroner, Yoram
Paroush, Jacob
Keywords: market discipline
bank failure
bank asset-liability Bank Failure
Bank management
deposit insurance
risk premium
Issue Date: Oct-2003
Series/Report no.: S-FI-03-12
Abstract: In recent years market discipline attracted interest as a mechanism to augment or to partially replace government oversight (discipline) of the financial sector, specifically depository institutions. Despite the abundance of research, mostly empirical studies, in the area no formal model has been presented to analyze the different aspects of the issue. This paper attempts to fill this gap. In our model we incorporate the characteristics of the regulatory structure and market discipline and examine the effects of several parameters on the optimal decisions of the bank. For example we consider the effects of changes in risk, deposit insurance coverage, and degree of market discipline. In most cases our results are compatible with recent empirical findings.
URI: http://hdl.handle.net/2451/27033
Appears in Collections:Financial Institutions

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