Rethinking Market Discipline in Banking : Lessons from the Financial Crisis

Stephanou, Constantinos

dc.creator	Stephanou, Constantinos
dc.date	2012-03-19T18:38:32Z
dc.date	2012-03-19T18:38:32Z
dc.date	2010-03-01
dc.date.accessioned	2023-02-17T21:02:16Z
dc.date.available	2023-02-17T21:02:16Z
dc.identifier	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100303081544
dc.identifier	http://hdl.handle.net/10986/3717
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/244681
dc.description	The main objective of this paper is to rethink the use of market discipline for prudential purposes in light of lessons from the financial crisis. The paper develops the main building blocks of a market discipline framework, and argues for the need to take an expansive view of the concept. It also illustrates using actual bank case studies from the United States its apparent failures in the crisis, particularly the failure to prevent the buildup of systemic, as opposed to idiosyncratic, risks. However, while the role of market discipline in the design of macro-prudential regulation appears to be largely constrained, more can be done on the micro-prudential side to promote clearer market signals of bank riskiness and to encourage their use in the supervisory process.
dc.language	English
dc.relation	Policy Research working paper ; no. WPS 5226
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	ACCOUNTING
dc.subject	ACCOUNTING RULES
dc.subject	ACCOUNTING STANDARDS
dc.subject	AGENCY PROBLEMS
dc.subject	AMOUNT OF DEBT
dc.subject	AMOUNT OF RISK
dc.subject	ASYMMETRIC INFORMATION
dc.subject	AUDITORS
dc.subject	BALANCE SHEET
dc.subject	BANK BEHAVIOR
dc.subject	BANK EXPOSURES
dc.subject	BANK FAILURE
dc.subject	BANK FOR INTERNATIONAL SETTLEMENTS
dc.subject	BANK HOLDING
dc.subject	BANK HOLDING COMPANIES
dc.subject	BANK LENDING
dc.subject	BANK MANAGEMENT
dc.subject	BANK POLICY
dc.subject	BANK PROFITS
dc.subject	BANK REGULATION
dc.subject	BANK SECURITIES
dc.subject	BANK SECURITY
dc.subject	BANK SUPERVISORS
dc.subject	BANKING CRISIS
dc.subject	BANKING REGULATION
dc.subject	BANKING SECTOR
dc.subject	BANKING SUPERVISION
dc.subject	BANKING SYSTEM
dc.subject	BANKRUPTCY
dc.subject	BANKS
dc.subject	BASIS POINTS
dc.subject	BOARDS OF DIRECTORS
dc.subject	BOND YIELD
dc.subject	BONDS
dc.subject	CAPITAL ACCORD
dc.subject	CAPITAL MARKETS
dc.subject	CAPITAL REQUIREMENTS
dc.subject	CAPITAL STANDARDS
dc.subject	CAPITAL STRUCTURE
dc.subject	CDS
dc.subject	CHECKS
dc.subject	CLASS ACTION
dc.subject	COMMERCIAL BANKS
dc.subject	COMMON SHARES
dc.subject	COMMON STOCK
dc.subject	CONFLICTS OF INTEREST
dc.subject	CONSOLIDATION
dc.subject	CONTINGENCY PLANS
dc.subject	CONTRACT ENFORCEMENT
dc.subject	CONVERTIBLE DEBENTURES
dc.subject	CORPORATE FINANCE
dc.subject	CORPORATE GOVERNANCE
dc.subject	COUPON
dc.subject	COUPON RATE
dc.subject	CREDIT DEFAULT
dc.subject	CREDIT DEFAULT SWAPS
dc.subject	CREDIT RATING
dc.subject	CREDIT RATING AGENCIES
dc.subject	CREDIT RATINGS
dc.subject	CREDIT RISK
dc.subject	CREDITORS
dc.subject	DEBT INSTRUMENT
dc.subject	DEBT ISSUANCE
dc.subject	DEBT PRICE
dc.subject	DEBT PRICES
dc.subject	DEPOSIT
dc.subject	DEPOSIT INSURANCE
dc.subject	DEPOSIT INSURANCE COVERAGE
dc.subject	DEPOSIT INSURANCE SCHEMES
dc.subject	DEPOSITOR
dc.subject	DEPOSITORS
dc.subject	DEPOSITS
dc.subject	DERIVATIVES
dc.subject	DEVELOPING COUNTRIES
dc.subject	DEVELOPMENT BANK
dc.subject	DISCLOSURE REQUIREMENTS
dc.subject	DIVIDEND
dc.subject	EFFICIENT MARKET
dc.subject	EFFICIENT MARKETS
dc.subject	EMERGING ECONOMIES
dc.subject	EQUITIES
dc.subject	EQUITY HOLDINGS
dc.subject	EQUITY INDEX
dc.subject	EQUITY MARKET
dc.subject	EQUITY PRICES
dc.subject	EXPOSURE
dc.subject	EXTERNAL MARKET
dc.subject	EXTERNALITIES
dc.subject	FACE VALUE
dc.subject	FAIR
dc.subject	FAIR VALUE
dc.subject	FEDERAL RESERVE
dc.subject	FEDERAL RESERVE SYSTEM
dc.subject	FINANCIAL ACCOUNTING
dc.subject	FINANCIAL CRISIS
dc.subject	FINANCIAL DEREGULATION
dc.subject	FINANCIAL INSTITUTIONS
dc.subject	FINANCIAL INSTRUMENTS
dc.subject	FINANCIAL MARKET
dc.subject	FINANCIAL MARKETS
dc.subject	FINANCIAL PERFORMANCE
dc.subject	FINANCIAL REGULATION
dc.subject	FINANCIAL SECTOR
dc.subject	FINANCIAL SERVICES
dc.subject	FINANCIAL STABILITY
dc.subject	FINANCIAL STRENGTH
dc.subject	FINANCIAL SYSTEM
dc.subject	FINANCIAL SYSTEMS
dc.subject	GAMBLING
dc.subject	GLOBAL BANKING
dc.subject	GLOBALIZATION
dc.subject	GOOD GOVERNANCE
dc.subject	GOVERNANCE PRACTICES
dc.subject	GOVERNMENT INTERVENTION
dc.subject	GOVERNMENT SUPPORT
dc.subject	HEDGE FUNDS
dc.subject	HOSTILE TAKEOVERS
dc.subject	HYBRID SECURITIES
dc.subject	ILLIQUIDITY
dc.subject	INDIVIDUAL MARKET
dc.subject	INFORMATION ASYMMETRIES
dc.subject	INFORMATION DISCLOSURE
dc.subject	INFORMATION DISCLOSURES
dc.subject	INFORMATIONAL ASYMMETRIES
dc.subject	INSTITUTIONAL ENVIRONMENTS
dc.subject	INSTITUTIONAL INVESTORS
dc.subject	INSTRUMENT
dc.subject	INSURANCE
dc.subject	INSURANCE COMPANIES
dc.subject	INTERNATIONAL ACCOUNTING STANDARDS
dc.subject	INTERNATIONAL BANK
dc.subject	INTERNATIONAL ECONOMICS
dc.subject	INVESTMENT BANK
dc.subject	INVESTMENT BANKS
dc.subject	INVESTOR PROTECTION
dc.subject	JUNK BOND
dc.subject	LACK OF TRANSPARENCY
dc.subject	LEGAL PROTECTION
dc.subject	LENDER
dc.subject	LEVEL OF RISK
dc.subject	LEVY
dc.subject	LIABILITY
dc.subject	LIMITED LIABILITY
dc.subject	LIQUID MARKETS
dc.subject	LOAN
dc.subject	MACROECONOMIC ENVIRONMENT
dc.subject	MACROECONOMIC POLICIES
dc.subject	MANDATES
dc.subject	MARKET BENCHMARK
dc.subject	MARKET BENCHMARKS
dc.subject	MARKET DISCIPLINE
dc.subject	MARKET INFORMATION
dc.subject	MARKET PARTICIPANTS
dc.subject	MARKET PLAYERS
dc.subject	MARKET PRICES
dc.subject	MARKET PRICING
dc.subject	MARKET REGULATION
dc.subject	MARKET RISK
dc.subject	MARKET THEORY
dc.subject	MATURITY
dc.subject	MORAL HAZARD
dc.subject	MORTGAGE
dc.subject	NARROW BANKING
dc.subject	POLICY RESPONSES
dc.subject	POLITICAL CONSIDERATIONS
dc.subject	PREFERENTIAL ACCESS
dc.subject	PRICE BEHAVIOR
dc.subject	PRICE INDEX
dc.subject	PRICE MOVEMENTS
dc.subject	PRICE SENSITIVITY
dc.subject	PRIMARY MARKET
dc.subject	PRINCIPAL-AGENT PROBLEMS
dc.subject	PRIVATE BANK
dc.subject	PRIVATE PROPERTY
dc.subject	PRIVATE SECTOR DEVELOPMENT
dc.subject	PROPERTY RIGHTS
dc.subject	PRUDENTIAL REGULATION
dc.subject	PRUDENTIAL STANDARDS
dc.subject	PUBLIC POLICY
dc.subject	RATING AGENCIES
dc.subject	REGULATORS
dc.subject	REGULATORY AUTHORITIES
dc.subject	REGULATORY CAPITAL
dc.subject	REGULATORY FRAMEWORKS
dc.subject	REGULATORY REPORTS
dc.subject	REGULATORY RESTRICTIONS
dc.subject	REGULATORY STANDARDS
dc.subject	RETAIL
dc.subject	RETURN
dc.subject	RISK ASSESSMENT PROCESSES
dc.subject	RISK EXPOSURES
dc.subject	RISK MANAGEMENT
dc.subject	RISK MANAGEMENT SYSTEMS
dc.subject	RISK MANAGERS
dc.subject	RISK OF DEFAULT
dc.subject	RISK PROFILE
dc.subject	SAFETY NET
dc.subject	SAFETY NETS
dc.subject	SECONDARY MARKET
dc.subject	SECURITIES
dc.subject	SECURITY PRICES
dc.subject	SHARE PRICE
dc.subject	SHAREHOLDERS
dc.subject	SHORT-TERM REPOS
dc.subject	SHORT-TERM YIELD
dc.subject	SOLVENCY
dc.subject	SPREAD
dc.subject	STATISTICAL ANALYSIS
dc.subject	STOCK PRICE
dc.subject	SUBORDINATED DEBT
dc.subject	SUPERVISORY AUTHORITIES
dc.subject	SYSTEMIC RISK
dc.subject	SYSTEMIC RISKS
dc.subject	TIER 1 CAPITAL
dc.subject	TRADING
dc.subject	TRANSPARENCY
dc.subject	TREASURY
dc.subject	TYPES OF INSTRUMENTS
dc.subject	UNSECURED DEBT
dc.subject	VOLATILITY
dc.subject	WORKING CAPITAL
dc.title	Rethinking Market Discipline in Banking : Lessons from the Financial Crisis
dc.type	Publications & Research :: Policy Research Working Paper
dc.coverage	The World Region
dc.coverage	The World Region