Market Discipline of Banks’ Riskiness: A Study of Selected Issues

Bruni, Franco; Paternò, Francesco

doi:10.1007/978-1-4757-2373-1_8

Cited by 13 publications

(4 citation statements)

References 13 publications

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“…These ratings differ from traditional ones in that they focus on banks economic and financial conditions and do not take into account 11 I am aware of one single empirical study based on European banks SND data. Bruni and Paternò (1995) analyzed the issue of market discipline by examining the statistical relationship between secondary market spreads, Moody's ratings and accounting variables as proxies of bank risk and concluded in favor of the risk sensitivity of SND spreads. However, their analysis was limited to a sample of 28 SND issues for which one single day secondary market spreads were collected, and two accounting variables (leverage and return on assets).…”

Section: Second the Empirical Analysis Makes Use Of Moody's Banks Fimentioning

confidence: 99%

Testing for Market Discipline in the European Banking Industry: Evidence from Subordinated Debt Issues

Sironi¹

2003

Journal of Money, Credit, and Banking

310

200

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The question of whether private investors can discriminate between the risk taken by banks is empirically investigated by testing the risk sensitivity of European banks' subordinated notes and debentures (SND) spreads. A unique dataset of spreads, ratings, accounting and market measures of bank risk is used for a sample of SND issued during the 1991-2000:Q1 period. Moody's Bank Financial Strength (MBFS) and FitchIBCA Individual (FII) ratings, which omit the influence of government and other external support on risk borne by investors, are found to perform better than accounting variables in explaining the variability of spreads. Empirical results support the hypothesis that SND investors are sensitive to bank risk, with the exception of SND issued by public banks, i.e. government owned or guaranteed institutions. Results also show that the risk sensitivity of SND spreads has improved during the nineties. JEL Classification Numbers: G15, G21, G28

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Section: Second the Empirical Analysis Makes Use Of Moody's Banks Fimentioning

confidence: 99%

Testing for Market Discipline in the European Banking Industry: Evidence from Subordinated Debt Issues

Sironi¹

2003

Journal of Money, Credit, and Banking

310

200

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“…I am aware of three empirical studies based on European banks:Bruni and Paterno (1995),Gropp et al (2001) andSironi (2003). 2 FollowingMorgan (2002), I use the term Bopaqueness^and Buncertainty^equivalently.…”

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confidence: 99%

Testing for Opaqueness in the European Banking Industry: Evidence from Bond Credit Ratings

Iannotta

2006

J Finan Serv Res

133

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“…5 5 Banks, as information specialists, rely on a certain amount of ‘informational opaqueness’ to provide added‐value services (Bruni and Paterno, 1995). The Basel Committee has recognised the importance of striking the right balance between the need for meaningful disclosure to allow for the effective operation of market discipline and the protection of bank proprietary information.…”

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confidence: 99%

THIS ARTICLE HAS BEEN RETRACTED A Framework for Market Discipline in Bank Regulatory Design

Hamalainen¹,

Hall²,

Howcroft

2005

Business Fin & Account

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Given current debates on the future direction of regulatory design, the first objective of this paper is to contextualise the issues surrounding bank market discipline. Accordingly, the paper raises awareness of the current key themes within incentive-based regulatory design and analyses the theory underlying market discipline. This leads to the creation of a theoretical framework of market discipline, which provides a powerful tool for understanding the conditions necessary for effective market discipline and for assessing the findings of market discipline-related empirical research. The second objective is to emphasise the suitability of the theoretical framework for debates on contemporary market discipline and aiding future bank regulatory policy design, in particular, how to incorporate suitable, incentive mechanisms in international banking regulation.

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Market Discipline of Banks’ Riskiness: A Study of Selected Issues

Cited by 13 publications

References 13 publications

Testing for Market Discipline in the European Banking Industry: Evidence from Subordinated Debt Issues

Testing for Market Discipline in the European Banking Industry: Evidence from Subordinated Debt Issues

Testing for Opaqueness in the European Banking Industry: Evidence from Bond Credit Ratings

THIS ARTICLE HAS BEEN RETRACTED A Framework for Market Discipline in Bank Regulatory Design

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Market Discipline of Banks’ Riskiness: A Study of Selected Issues

Cited by 13 publications

References 13 publications

Testing for Market Discipline in the European Banking Industry: Evidence from Subordinated Debt Issues

Testing for Market Discipline in the European Banking Industry: Evidence from Subordinated Debt Issues

Testing for Opaqueness in the European Banking Industry: Evidence from Bond Credit Ratings

THIS ARTICLE HAS BEEN RETRACTED A Framework for Market Discipline in Bank Regulatory Design

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Product

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THIS ARTICLE HAS BEEN RETRACTED A Framework for Market Discipline in Bank Regulatory Design