Abstract
References
- • Arnold, A., Grobl, I. and Koziol, P. (2015), Marker discipline across bank governance models: Empirical evidence from German depositors, Department of Socio-Economics Working Paper No. 2, University of Hamburg.
- • Aysan, A., Disli, M., Ozturk, H. and Turhan. I. (2013), Are Islamic banks subject to depositor discipline?, Faculty of Economics Working paper No. 871, Ghent University, Belgium.
- • Barajas, A. and Catalan, M. (2011), Market discipline and conflicts on interest between banks and pension funds, International Monetary Fund (IMF) Working paper No. 282.
- • Berger, A. (1991), Market discipline in banking. Proceedings of a Conference on Bank Structure and Competition, Federal Reserve Bank of Chicago.
- • Berger, A. and Turk-Ariss, R. (2015), Do depositors discipline banks and did government actions during the recent crisis reduce this discipline? An international perspective, Journal of Financial Services Research. Forthcoming.
- • Caprio, G. and Klingebiel, D. (2003), Episodes of systemic and borderline financial crises. Mimeo, World Bank.
- • Cubillas, E., Fonseca, A. and Gonzales, F. (2012), Banking crises and market discipline: International evidence. Journal of Banking and Finance, 36, pp. 2285- 2298.
- • Fama, E. (1980), Banking in the theory of finance, Journal of Monetary Economics, 6, pp. 39-57.
- • Hall, S. and Miles, D. (1991), Monitoring bank risk: A market-based approach, in M. Taylor (ed.) Money and Financial Markets, Oxford, Blackwell, pp. 244-243.
- • Hwang, Y. and Min, H. (2013), Market discipline of subordinated debt: Empirical evidence from Japanese commercial banks, Journal of Financial Risk Management, 2, pp. 38-42.
- • Imai, M. (2008), Market discipline and deposit insurance reform in Japan. Journal of Banking and Finance, 30, pp. 3422-3452.
- • Ioannidou, V. and de Dreu, J. (2010), The impact of explicit deposit insurance on market discipline, Tilburg University Discussion Paper No. 2006-05.
- • Karas, A., Pyle, W. and Schoors, K. (2012), Deposit insurance, banking crises, and market discipline: Evidence from a natural experiment on deposit flows and rates, Journal of Money, Credit and banking, 45, pp. 179-200.
- • Krishnan, C., P. Ritchken and J. Thomson (2013), Monitoring and controlling bank risk: Does risk debt serve any purpose?, Case Western Reserve University Working Paper No. 12, USA.
- • Laeven, L. and Valencia, F. (2013). Systemic banking crises database. IMF Economic Review, 6, p. 225-270.
- • Levine, R. (2004), Finance and growth: theory and evidence, NBER Working Paper No. 10766.
- • Morgam, D. and J. Stiroh (2011), Market discipline of banks: The best test, Journal of Financial Services Research, 20, pp. 195-208.
- • Murata, K. and Hori, M. (2006), Do small depositors exit from bad banks?: Evidence from small financial institutions in Japan, Japan Economic Review, 57, pp. 260-278.
- • Omet, G. and Fayyoumi, N. (2004) Do depositors discipline for risk and reward for cash prizes: The case of the Jordanian banking sector, ERF 11th Annual Conference: Post Conflict Reconstruction, Lebanon.
- • Shin, S., Min, H. and McDonald, J. (2014), The market-discipline effects of subordinated debt: Enhanced US commercial banking-sector efficiency and stability. Journal of Financial Risk Management, 3, pp. 78-95.
- • Sironi, A. (2012), Strengthening banks’ market discipline and levelling the playing field: Are the two compatible?, Journal of Banking and Finance, 26, pp. 1065- 1091.
- • Thiratanapong, N. (2012), Market discipline in banking: Evidence from Thailand during the 1997 crisis, Applied Economics Letters, 14, pp. 559-563.
- • Zhang, Z., Song, W., Sun, X. and Shi, N. (2014), Subordinated debt as instrument of market discipline: Risk sensitivity of sub-debt yield spreads in UK banking, Journal of Business and Economics, 73, pp. 1-21.
Abstract
This paper applies the issue of bank discipline to the Jordanian banking sector. Based on a total of 13 banks, the time period 2001-2012, and the Seemingly-Unrelated Regression (SUR), the results, on average, show that Jordanian depositors demand higher interest rate from banks with higher levels of risk. In addition, depositors seem to withdraw their depositors from banks with increasing levels of risk. These results are encouraging. Indeed, they indicate that depositors’ disciplining behavior complements the efforts of the Central Bank of Jordan (CBJ).
References
- • Arnold, A., Grobl, I. and Koziol, P. (2015), Marker discipline across bank governance models: Empirical evidence from German depositors, Department of Socio-Economics Working Paper No. 2, University of Hamburg.
- • Aysan, A., Disli, M., Ozturk, H. and Turhan. I. (2013), Are Islamic banks subject to depositor discipline?, Faculty of Economics Working paper No. 871, Ghent University, Belgium.
- • Barajas, A. and Catalan, M. (2011), Market discipline and conflicts on interest between banks and pension funds, International Monetary Fund (IMF) Working paper No. 282.
- • Berger, A. (1991), Market discipline in banking. Proceedings of a Conference on Bank Structure and Competition, Federal Reserve Bank of Chicago.
- • Berger, A. and Turk-Ariss, R. (2015), Do depositors discipline banks and did government actions during the recent crisis reduce this discipline? An international perspective, Journal of Financial Services Research. Forthcoming.
- • Caprio, G. and Klingebiel, D. (2003), Episodes of systemic and borderline financial crises. Mimeo, World Bank.
- • Cubillas, E., Fonseca, A. and Gonzales, F. (2012), Banking crises and market discipline: International evidence. Journal of Banking and Finance, 36, pp. 2285- 2298.
- • Fama, E. (1980), Banking in the theory of finance, Journal of Monetary Economics, 6, pp. 39-57.
- • Hall, S. and Miles, D. (1991), Monitoring bank risk: A market-based approach, in M. Taylor (ed.) Money and Financial Markets, Oxford, Blackwell, pp. 244-243.
- • Hwang, Y. and Min, H. (2013), Market discipline of subordinated debt: Empirical evidence from Japanese commercial banks, Journal of Financial Risk Management, 2, pp. 38-42.
- • Imai, M. (2008), Market discipline and deposit insurance reform in Japan. Journal of Banking and Finance, 30, pp. 3422-3452.
- • Ioannidou, V. and de Dreu, J. (2010), The impact of explicit deposit insurance on market discipline, Tilburg University Discussion Paper No. 2006-05.
- • Karas, A., Pyle, W. and Schoors, K. (2012), Deposit insurance, banking crises, and market discipline: Evidence from a natural experiment on deposit flows and rates, Journal of Money, Credit and banking, 45, pp. 179-200.
- • Krishnan, C., P. Ritchken and J. Thomson (2013), Monitoring and controlling bank risk: Does risk debt serve any purpose?, Case Western Reserve University Working Paper No. 12, USA.
- • Laeven, L. and Valencia, F. (2013). Systemic banking crises database. IMF Economic Review, 6, p. 225-270.
- • Levine, R. (2004), Finance and growth: theory and evidence, NBER Working Paper No. 10766.
- • Morgam, D. and J. Stiroh (2011), Market discipline of banks: The best test, Journal of Financial Services Research, 20, pp. 195-208.
- • Murata, K. and Hori, M. (2006), Do small depositors exit from bad banks?: Evidence from small financial institutions in Japan, Japan Economic Review, 57, pp. 260-278.
- • Omet, G. and Fayyoumi, N. (2004) Do depositors discipline for risk and reward for cash prizes: The case of the Jordanian banking sector, ERF 11th Annual Conference: Post Conflict Reconstruction, Lebanon.
- • Shin, S., Min, H. and McDonald, J. (2014), The market-discipline effects of subordinated debt: Enhanced US commercial banking-sector efficiency and stability. Journal of Financial Risk Management, 3, pp. 78-95.
- • Sironi, A. (2012), Strengthening banks’ market discipline and levelling the playing field: Are the two compatible?, Journal of Banking and Finance, 26, pp. 1065- 1091.
- • Thiratanapong, N. (2012), Market discipline in banking: Evidence from Thailand during the 1997 crisis, Applied Economics Letters, 14, pp. 559-563.
- • Zhang, Z., Song, W., Sun, X. and Shi, N. (2014), Subordinated debt as instrument of market discipline: Risk sensitivity of sub-debt yield spreads in UK banking, Journal of Business and Economics, 73, pp. 1-21.
Details
| Journal Section | Articles |
|---|---|
| Authors | |
| Publication Date | June 29, 2015 |
| Published in Issue | Year 2015 Volume: 4 Issue: 2 |
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