Market Discipline and Bank Charter Value: The Case of Two Safe Banking Industries

Mamiza Haq, Amine Tarazi, Necmi Avkiran and Ana Rosa Fonceca
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Mamiza Haq: UQ [All campuses : Brisbane, Dutton Park Gatton, Herston, St Lucia and other locations] - The University of Queensland
Necmi Avkiran: UQ [All campuses : Brisbane, Dutton Park Gatton, Herston, St Lucia and other locations] - The University of Queensland
Ana Rosa Fonceca: Universidad de Oviedo = University of Oviedo

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Abstract: This paper analyses the relationship between market discipline and bank charter value using a panel dataset of publicly-listed domestic banks in Australia and Canada over the 1995-2011 periods, with particular focus on the 2007/2008 global financial crisis (GFC). Overall, our results show a positive relationship between market discipline and bank charter value, although this has reduced in the post-GFC period. Furthermore, our findings reveal that in the presence of market discipline, bank capital, contingent liabilities, and non-interest income are important sources of charter value. These findings have important policy implications related to bank safety and soundness. The results are robust to model specification.

Keywords: charter value; market discipline; global financial crisis (search for similar items in EconPapers)
Date: 2013-10-30
Note: View the original document on HAL open archive server: https://unilim.hal.science/hal-00955135
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Citations: View citations in EconPapers (2)

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