Sophisticated Discipline in a Nascent Deposit Market: Evidence from Post-Communist Russia

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Sophisticated Discipline in Nascent Deposit Markets: Evidence from Post-Communist Russia

In nascent markets with relatively immature institutions, do depositors have the capacity to discipline banks with poor fundamentals? If so, what information specifically guides their response? Using a database from post-communist, pre-deposit-insurance Russia, we present evidence for quantity-based sanctioning of weaker banks by both firms and households, particularly after the 1998 financial ...

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THE WILLIAM DAVIDSON INSTITUTE AT THE UNIVERSITY OF MICHIGAN Sophisticated Discipline in Nascent Deposit Markets: Evidence from Post-Communist Russia

Using a database from post-communist, pre-deposit-insurance Russia, we demonstrate the presence of quantity-based sanctioning of weaker banks by both firms and households, particularly after the financial crisis of 1998. Evidence for the standard form of price discipline, however, is notably weak. Estimating the deposit supply function, we show that, particularly for poorly capitalized banks, i...

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ژورنال

عنوان ژورنال: SSRN Electronic Journal

سال: 2006

ISSN: 1556-5068

DOI: 10.2139/ssrn.965452