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Market discipline in South Asia: Evidence from commercial banking sector

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  • Ayesha Afzal
  • Nawazish Mirza
  • Fatima Arshad

Abstract

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.

Suggested Citation

  • Ayesha Afzal & Nawazish Mirza & Fatima Arshad, 2021. "Market discipline in South Asia: Evidence from commercial banking sector," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 2251-2262, April.
    • Handle: RePEc:wly:ijfiec:v:26:y:2021:i:2:p:2251-2262
    DOI: 10.1002/ijfe.1904
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    1. Xie, Xin & Mirza, Nawazish & Umar, Muhammad & Ji, Xiaoman, 2024. "Covid-19 and market discipline: Evidence from the banking sector in emerging markets," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 612-621.

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