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Does market discipline impact bank charter value? The case for Australia and Canada
Author(s) -
Haq Mamiza,
Avkiran Necmi K.,
Tarazi Amine
Publication year - 2019
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12244
Subject(s) - charter , market discipline , financial crisis , value (mathematics) , market value , financial system , panel data , business , bank regulation , economics , accounting , political science , macroeconomics , law , econometrics , machine learning , computer science
This study analyses the relation between market discipline and bank charter value using a panel data set of publicly listed domestic banks in Australia and Canada over the period of 1995–2011, with a focus on the 2007–2008 global financial crisis ( GFC ). Overall, the results show a positive relation between market discipline and bank charter value, but this relation is weaker in the post‐ GFC period. 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 stability. The results are robust to several model specifications.