Depositor behavior and market discipline in Colombia

Infocede ()

No 20095, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: This study examines how depositors choose among different banks and over time in Colombia, focusing on whether they discipline bank behavior. By controlling for a more comprehensive set of risk/return factors, the study improves upon conventional market discipline tests. Panel data estimations for 1985-99 show that depositors prefer banks with stronger fundamentals, and that banks tend to improve their fundamentals after being "punished" by depositors. Banks with stronger fundamentals benefit from lower interest costs and higher lending rates. Market (or "regulatory") discipline therefore appears to exist in Colombia, perhaps thanks to certain key design features of the deposit insurance scheme.

Keywords: Banking; systemMarket; disciplineDeposit; insuranceColombiaSeguros; de; depósitos; bancarios; -; ColombiaInstituciones; financieras; -; ColombiaPolítica; monetaria; -; Colombia; -; 1985-1999 (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Pages: 35
Date: 2001-05-16
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://repositorio.uniandes.edu.co/bitstream/handle/1992/7925/dcede2001-01.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:col:000089:020095

Access Statistics for this paper

More papers in Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE Contact information at EDIRC.
Bibliographic data for series maintained by Universidad De Los Andes-Cede ().