Bank capital, institutional environment and systemic stability

Anginer, Deniz; Demirgüç-Kunt, Aslı; Mare, Davide Salvatore

doi:10.1016/j.jfs.2018.06.001

Cited by 96 publications

(64 citation statements)

References 46 publications

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“…Although institutional quality may have a direct impact on financial stability as reported by Das, Quintyn, and Chenard (2004), some recent papers report that the effectiveness of policies aimed at maintaining financial stability is mediated by some proxy for institutional quality (cf. Anginer, Demirgüç-Kunt, and Mare 2018).…”

Section: Introductionmentioning

confidence: 99%

Does institutional quality condition the impact of financial stability transparency on financial stability?

van Duuren,

de Haan,

van Kerkhoff

2019

Applied Economics Letters

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Section: Introductionmentioning

confidence: 99%

Does institutional quality condition the impact of financial stability transparency on financial stability?

van Duuren,

de Haan,

van Kerkhoff

2019

Applied Economics Letters

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“…In practice, regulatory monitoring based on capital requirements is not sufficient to address banks' moral hazard concerns (Hellmann, Murdock, and Stiglitz, 2000). Banks typically hold opaque assets, while their financial conditions change over time (Flannery, Kwan, and Nimalendran, 2004); as such, regulatory discipline (including capital requirements) often lags behind bank operations, and strict bank capital requirements may create greater moral hazard problems (Besanko and Kanatas, 1993;Anginer, Demirgüç-Kunt, and Mare, 2018). On the other hand, supervisory access to inside information on a bank's condition may be superior for two reasons: a supervisory authority can force managers to reveal information, while a single supervisory authority does not suffer the coordination (free rider) problems associated with having many fragmented stakeholders (Flannery, 1998).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Regulators vs. Markets: Do Differences in Their Bank Risk Perceptions Affect Lending Terms?

et al. 2020

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We quantify the differences between market and regulatory assessments of bank portfolio risk, showing that larger differences significantly reduce corporate lending rates. Specifically, to entice borrowers, banks reduce spreads by approximately 4.1% following a one standard deviation increase in our measure for bank asset-risk differences. This amounts to an interest income loss of USD 1.95 million on a loan of average size and duration. The separate effects of market and regulatory risk are much less potent. Our study reveals a disciplinarycompetition effect in favor of corporate borrowers when there is information asymmetry between investors and bank regulators.

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“…Measures the ratio of total capital to total assets in the bank over one year (Anginer, Demirgüç -Kunt, & Mare, 2018) Audit quality: AQ Indicates the overall audit fee paid to the auditors in terms of their remuneration for the inspection and quality of financial statements on annual basis (Narayanaswamy & Raghunandan, 2019)…”

Section: Capital Adequacy Ratio: Carmentioning

confidence: 99%

Country Governance, Market Concentration and Financial Market Dynamics for Banks Stability in Pakistan

Kamran¹,

Arshad²,

Omran³

2019

RWE

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Considering the country governance, market concentration and financial market dynamics are key explanatory indicators, this study has examined the stability trends in commercial banks of Pakistan. Overall sample of 28 banks is considered, adding both conventional and Islamic banks into consideration for the panel regression models like fixed effect and random effect. Findings for overall sample indicates that both stability measures in the form of z-score ROA and ROE are significantly and negatively affected by poor control over corruption, regulatory quality, market concentration, financial market development and increasing non-performing loans. For conventional banking, key determinants of financial stability are control over corruption, political instability, market structure and credit risk. For Islamic banking firms, corruption and government effectiveness, capital adequacy ratio, market structure and financial market development are significant determinants, affecting Z measures of stability. However, through lending interest rate, we do not find any significant relationship with both stability measures. Study findings are very useful for country officials, risk officers, and other stakeholders in financial markets who want to explore the relationship between country governance and financial market dynamics in the economy of Pakistan. In addition, study has experienced various limitations like non-consideration of bank-based and macroeconomic risk factors, international trends in banking and their influence on domestic banks of Pakistan, which could be reconsidered in coming research.

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Bank capital, institutional environment and systemic stability

Cited by 96 publications

References 46 publications

Does institutional quality condition the impact of financial stability transparency on financial stability?

Does institutional quality condition the impact of financial stability transparency on financial stability?

Regulators vs. Markets: Do Differences in Their Bank Risk Perceptions Affect Lending Terms?

Country Governance, Market Concentration and Financial Market Dynamics for Banks Stability in Pakistan

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