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Watchdogs or Petdogs: The role of media freedom on banking system stability

Author

Listed:
  • Nguyen, My
  • Samarasinghe, Ama
  • Skully, Michael

Abstract

This paper documents a positive impact of media freedom on bank stability at both bank- and systemic- levels. The results are robust after addressing endogeneity concerns as well as macroeconomic and regulatory factors that impact the association between media freedom and bank stability. We further find that greater media freedom diffuses more information about intermediaries to depositors, incentivising them to discipline and limit bank risk-taking activities. Media freedom also exerts a greater influence on bank stability in more developed countries. Overall, our results highlight the importance of media freedom in enhancing individual bank and systemic stability around the world.

Suggested Citation

  • Nguyen, My & Samarasinghe, Ama & Skully, Michael, 2024. "Watchdogs or Petdogs: The role of media freedom on banking system stability," Pacific-Basin Finance Journal, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:pacfin:v:87:y:2024:i:c:s0927538x24002518
    DOI: 10.1016/j.pacfin.2024.102499
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    More about this item

    Keywords

    Bank stability; Media freedom; Market discipline; Media ownership;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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