Evidence of Bank Market Discipline in Subordinated Debenture Yields: 1983-1991
Mark Flannery and
Sorin M Sorescu
Journal of Finance, 1996, vol. 51, issue 4, 1347-77
The authors examine debenture yields over the period 1983-91 to evaluate the market's sensitivity to bank-specific risks and conclude that investors have rationally reflected changes in the government's policy toward absorbing private losses in the event of a bank failure. Although this evidence does not establish that market discipline can effectively control banking firms, it soundly rejects the hypothesis that investors cannot rationally differentiate among the risks undertaken by the major U.S. banking firms. Copyright 1996 by American Finance Association.
References: Add references at CitEc
Citations: View citations in EconPapers (194) Track citations by RSS feed
Downloads: (external link)
http://links.jstor.org/sici?sici=0022-1082%2819960 ... O%3B2-8&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:51:y:1996:i:4:p:1347-77
Ordering information: This journal article can be ordered from
Access Statistics for this article
More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().