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Rethinking Market Discipline in Banking : Lessons From the Financial Crisis / Stephanou, Constantinos
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Stephanou, Constantinos
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Access to Finance.
- Accounting.
- Bank failure.
- Bank management.
- Banking supervision.
- Banks.
- Banks & Banking Reform.
- Capital markets.
- Capital requirements.
- Commercial banks.
- Contract enforcement.
- Debt Markets.
- Emerging Markets.
- Finance and Financial Sector Development.
- Financial institutions.
- Financial regulation.
- Financial services.
- Financial systems.
- Insurance.
- Legal protection.
- Macroeconomics and Economic Growth.
- Mandates.
- Market discipline.
- Markets and Market Access.
- Moral hazard.
- Private Sector Development.
- Statistical analysis.
- Systemic risk.
- Local Subjects:
- Access to Finance.
- Accounting.
- Bank failure.
- Bank management.
- Banking supervision.
- Banks.
- Banks & Banking Reform.
- Capital markets.
- Capital requirements.
- Commercial banks.
- Contract enforcement.
- Debt Markets.
- Emerging Markets.
- Finance and Financial Sector Development.
- Financial institutions.
- Financial regulation.
- Financial services.
- Financial systems.
- Insurance.
- Legal protection.
- Macroeconomics and Economic Growth.
- Mandates.
- Market discipline.
- Markets and Market Access.
- Moral hazard.
- Private Sector Development.
- Statistical analysis.
- Systemic risk.
- Physical Description:
- 1 online resource (40 pages)
- Other Title:
- Rethinking Market Discipline In Banking
- Place of Publication:
- Washington, D.C., The World Bank, 2010
- System Details:
- data file
- Summary:
- 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.
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