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Special Report on

Market discipline and subordinated debt

market discipline and subordinated debt special research report Photo by auburnsquare.com
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. To download: If you experience problems downloading a file, ...
This means, in order to meet economic necessity, buyers must avoid prices that will drive them into bankruptcy and sellers must find prices that will generate revenue (or suffer the same fate). Market discipline is a topic of particular concern because of banking deposit insurance laws. Most governments offer deposit insurance for people making deposits with banks. Normally, bank managers have strong incentives to avoid risky loans and other investments, however, mandated deposit insurance eliminates much of the risk to bankers. This constitutes a loss of market discipline. In order to counteract this loss of market discipline, ...
REVIEWS AND OPINIONS
[lbo-talk] Tett: The Bail-In Solution to Too Big Too Fail
But what is still unclear, even amid all the legislation, is whether [the resolution authority, etc] will be robust enough to really prevent more big bank failures. Hence the lingering suspicion that taxpayers could soon end up back on the hook; and hence all that simmering anger. Is there any solution? One fascinating idea now provoking a chorus of behind-the-scenes debate among regulators and central banks is the concept of a so-called "bail-in". This idea, mooted by Credit Suisse in an essay this year, argues that in essence the best way to handle a crisis at a large, systemically important bank is to force creditors ... market research, surveys and trends
Ebook Market discipline in the banking industry. Evidence from ...
During the last two decades academic and regulatory economists have been suggesting that supervisory authorities should rely on market discipline to improve banking prudential supervision. Even the Basel Committee on Banking Supervision has recognized the role of market discipline in supplementing traditional supervisory methods. In the New Basel Capital Accord market discipline is one of the three pillars on which the future banking oversight should be based. While the first two pillars focus on capital regulation and national banking supervision, the third pillar is aimed at improving banks’ disclosure for an effective market ... market research, surveys and trends

SURVEY RESULTS FOR
MARKET DISCIPLINE AND SUBORDINATED DEBT

The Determinants of Yield Spreads and the Market Discipline of ...
all banks at the end of 1998 was $102.8 billion, of which $100 billion was issued by the ... assets beyond the minimum regulatory requirement of 8 percent ...... Bliss, R., 2000, Market discipline and subordinated debt: A review of some ... industry trends, business articles and survey research
1 Monitoring Financial Intermediaries with Subordinated Debt: A ...
grew to $5.3 billions in the fourth quarter of 1999 from $3.7 billion in the ..... One percent increase in the Treasury yield changes translates into 0.72 % in ..... Bliss, R.R. (2000), “Market Discipline and Subordinated Debt: A Review ... industry trends, business articles and survey research
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INFORMATION RESOURCES

REGULATING BANKS THROUGH MARKET DISCIPLINE: A SURVEY OF THE ISSUES
Bliss, R.R. (2001) Market discipline and subordinated debt: a review of some salient issues,. Economic Perspectives, Federal Reserve Bank of Chicago, 24–45. ... technology research, surveys study and trend statistics
Staff Studies Summary: 172
A growing number of observers have proposed using subordinated notes and debentures (SND) as a way of increasing market discipline on banks and banking organizations. Although policy proposals vary, all would mandate that banks subject to the policy must issue and maintain a minimum amount of SND. In recent years, the perceived need for more market discipline has derived primarily from the realization that the increasing size and complexity of the major banking organizations has made the supervisor's job of protecting bank safety and soundness ever more difficult. A second important motivation is the desire to find ... technology research, surveys study and trend statistics
SUBORDINATED DEBT: A CAPITAL MARKETS APPROACH TO BANK REGULATION
Banking organizations in the United States are growing larger, more complex and more diversified in their operations. As a result, bank regulators are becoming less able to understand and supervise their regulatory charges. The recently enacted Gramm-Leach-Bliley Act contributed to this trend by expanding the activities in which banks and their affiliates may engage. The authors argue that increasing the amount of market discipline to which banks are subject promises to remedy many of the shortcomings of government supervision and regulation. This Article proposes that large banks should be required to issue a minimum amount of ...
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MARKET DISCIPLINE AND SUBORDINATED DEBT
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QUESTIONS AND ANSWERS
WikiAnswers - What does financial discipline mean
Not letting yourself become easily angered at others. Being able to look at a situation and not let emotions get in the way of your judgment. Controlling your actions as to not hurt yourself or... What do you mean by ' Financial System. Explain the various components of Financial system? what do you mean by 'financial system.explain the various components of financial system? What does class discipline mean ? It's discipline in the class. please improve this answer Related articles: Strengthening market disciplines in the financial sector. (Articles). The Reserve Bank of New Zealand Bulletin ; Sep 1, 2002; ...
When will the time be right to invest in Fannie Mae?
If you’re thinking the stocks of Fannie Mae and Freddie Mac are bargains that may regain their highs of the glory days — be very careful. You may not win this bet. I’ve seen it before, the stock of a troubled but venerable public company that once traded for good money drops to penny-stock territory. Investors, gambling that the shares will rise from the ashes like the mythical Phoenix, go on a buying binge. But for the average individual investor, this is a place where only the well heeled, or experienced, should go. Fannie Mae and Freddie Mac were taken over by the federal government on Sept. 7 in an effort to rescue the ...