Bank risk, charter value and depositor discipline: a simultaneous equations approach

Saibal Ghosh

Applied Economics Letters, 2009, vol. 16, issue 6, pages 639-644

Abstract: Using data on listed Indian banks for 1996-2006, the article finds that charter value, depositor discipline and bank risk-taking are intertwined, with each tending to reinforce the other. Whereas charter value is found to be a nonlinear determinant of market discipline, the latter is found to positively impact charter value. Additionally, higher risk-taking is found to exert a weakening effect on market discipline.

Date: 2009

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