Depositor Behavior and Market Discipline in Colombia

By Adolfo Barajas, Roberto Steiner. Social Science Research Network, 2000

81 citations recorded by the source corpus.

This study examines how depositors choose among different banks and over time in Colombia, focusing on whether they discipline bank behavior. By controlling for a more comprehensive set of risk/return factors, the study improves upon conventional market discipline tests. Panel data estimations for 1985-99 show that depositors prefer banks with stronger fundamentals, and that banks tend to improve their fundamentals after being "punished" by depositors. Banks with stronger fundamentals benefit from lower interest costs and higher lending rates. Market (or "regulatory") discipline therefore appears to exist in Colombia, perhaps thanks to certain key design features of the deposit insurance scheme.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/6a92dc3e63bb114132809a4c324a81f7858bb416

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. E. Cubillas
2. F. González
3. D. Cucinelli

In Finance

1. E. Cubillas
2. A. Fonseca
3. Andréa M. Maechler
4. F. González
5. Fotios Pasiouras
6. Sailesh Tanna
7. D. Cucinelli
8. J. Klomp

Citations in the corpus

• Dynamic Depositor Discipline in U.S. Banks (2003, background): “Barajas and Steiner (2000) notice that banks with stronger fundamentals benefit from lower interest costs and higher lending rates in Colombia.”
• Banking crises and market discipline: International evidence (2012, background): “Mondschean and Opiela (1999) provide evidence for Poland; Barajas and Steiner (2000) for Colombia; Martinez Peria and Schmukler (2001) for Argentina, Chile, and Mexico; and Hadad et al. (2011) for Indonesia.”