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Market discipline in South Asia: Evidence from commercial banking sector
Author(s) -
Afzal Ayesha,
Mirza Nawazish,
Arshad Fatima
Publication year - 2021
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.1904
Subject(s) - market liquidity , asset quality , economics , profitability index , capital adequacy ratio , market discipline , financial system , risk adjusted return on capital , monetary economics , basel iii , basel ii , capital requirement , finance , capital formation , financial capital , incentive , market economy , human capital
The paper investigates the presence of market discipline in the banking sectors of India and Pakistan, using the CAMEL approach and the stringent calculations of liquidity and capital as per Basel II. It employs a fixed effects model to market discipline as reflected in the capital adequacy, asset quality profitability, management and liquidity of banks, with bank size and changes and GDP as control variables, for the years 2008 to 2017. The results show varying degrees of market discipline in both India and Pakistan, which manifest through different variables.