Market discipline under systemic risk : evidence from bank runs in emerging economies / Eduardo Levy Yeyati, Maria Soledad Martinez Peria, and Sergio Schmukler.

By: Contributor(s): Material type: TextTextSeries: Policy research working papers ; no. 3440Publication details: Washington, D. C : World Bank, 2004.Description: 48p ; 27 cmSubject(s):
Tags from this library: No tags from this library for this title. Log in to add tags.
Star ratings
    Average rating: 0.0 (0 votes)

Also available online.

"Levy-Yayati, Martinez Peria, and Schmukler show that systematic risk exerts a significant impact on the behavior of depositors, sometimes overshadowing their responses to standard bank fundamentals. systematic risk can affect market discipline both regardless of and through bank fundamentals, First, worsening systemic conditions can directly threaten the value of deposits by way of dual agency problems. Second, to the extent that banks are exposed to systemic risk, systemic shocks lead to a future deterioration of fundamentals not captured by their current values. Using data from the recent banking crises in Argentina and Uruguay, the authors show that market discipline is in deeded quite robust once systemic risk is factored in. As systemic risk increases, the informational content of past fundamentals declines. These episodes also show how few systemic shocks can trigger a run

Includes bibliographical references.

Open access.

There are no comments on this title.

to post a comment.