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Does Market Discipline Impact Bank Charter Value? The Case for Australia and Canada"

Author

Listed:
  • Mamiza Haq

    (UQ [All campuses : Brisbane, Dutton Park Gatton, Herston, St Lucia and other locations] - The University of Queensland)

  • Necmi Avkiran

    (UQ [All campuses : Brisbane, Dutton Park Gatton, Herston, St Lucia and other locations] - The University of Queensland)

  • Amine Tarazi

    (LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges)

Abstract

This paper analyses the relationship between market discipline and bank charter value using a panel dataset of publicly-listed domestic banks in Australia and Canada over the 1995-2011 periods, with particular focus on the 2007/2008 global financial crisis (GFC). Overall, our results show a positive relationship between market discipline and bank charter value, although this has reduced in the post-GFC period. Furthermore, 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 safety and soundness. The results are robust to model specification.

Suggested Citation

  • Mamiza Haq & Necmi Avkiran & Amine Tarazi, 2019. "Does Market Discipline Impact Bank Charter Value? The Case for Australia and Canada"," Post-Print hal-01360863, HAL.
    • Handle: RePEc:hal:journl:hal-01360863
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