Table 6 - uploaded by Adolfo Barajas
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We study the behavior of private pension funds as large depositors in a banking system. Using panel data analysis, we examine whether, and if so how, pension funds influence market discipline in Argentina in the period 1998-2001. We find evidence that pension funds exert market discipline and this discipline gets stronger as the share of pension fu...
Context in source publication
Context 1
... contrast, banks that had no pension fund deposits before the crisis lost 10.1 percent of deposits. Table 6 shows the deposit reallocation conducted by pension funds during the crisis. Banks are listed in decreasing order by the size of the (net) pension fund deposit changes observed in the period January-November 2001. ...
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This paper identifies determinants associated with probability of banking crisis in Vietnam. By using data sample of more than 30 commercial banks from 2005 to 2013, the results from our multivariate logit model indicate that banking crisis tends to erupt as non-performing loans, borrowings from government and State bank of Vietnam are high. Moreov...
Citations
... In addition, some researchers examine the impact of bank risk measures on the growth rate in deposits or on banks' interest expense. Imai (2008), Ioannidou and de Dreu (2010), Barajas and Catalan (2011), Murata andHori (2011), Cubillas et al. (2012), Karas et al. (2012), Thiratanapong (2012), Arnold et al. (2015), and Berger and Turk-Ariss (2015) are some of those researchers that used this methodology. For example, based on a total of 2038 banks that operate in the USA, 21 European countries, and in Switzerland, the subperiods 1997-2007 and 2008-2009, and using deposit growth as the dependent variable, it is stated that "we find significant depositor discipline prior to the crisis in both the US and EU… We also find that depositor discipline mostly decreased during the crisis, except for the case of small US banks" (Berger and Turk-Ariss, 2015). ...
This paper applies the issue of bank discipline to the Jordanian banking sector. Based on a total of 13 banks, the time period 2001-2012, and the Seemingly-Unrelated Regression (SUR), the results, on average, show that Jordanian depositors demand higher interest rate from banks with higher levels of risk. In addition, depositors seem to withdraw their depositors from banks with increasing levels of risk. These results are encouraging. Indeed, they indicate that depositors' disciplining behavior complements the efforts of the Central Bank of Jordan (CBJ).
... In addition, some researchers examine the impact of bank risk measures on the growth rate in deposits or on banks' interest expense. Imai (2008), Ioannidou and de Dreu (2010), Barajas and Catalan (2011), Murata andHori (2011), Cubillas et al. (2012), Karas et al. (2012), Thiratanapong (2012), Arnold et al. (2015), and Berger and Turk-Ariss (2015) are some of those researchers that used this methodology. For example, based on a total of 2038 banks that operate in the USA, 21 European countries, and in Switzerland, the subperiods 1997-2007 and 2008-2009, and using deposit growth as the dependent variable, it is stated that "we find significant depositor discipline prior to the crisis in both the US and EU… We also find that depositor discipline mostly decreased during the crisis, except for the case of small US banks" (Berger and Turk-Ariss, 2015). ...
This paper applies the issue of bank discipline to the Jordanian banking sector. Based on a total of 13 banks, the time period 2001-2012, and the Seemingly-Unrelated Regression (SUR), the results, on average, show that Jordanian depositors demand higher interest rate from banks with higher levels of risk. In addition, depositors seem to withdraw their depositors from banks with increasing levels of risk. These results are encouraging. Indeed, they indicate that depositors’ disciplining behavior complements the efforts of the Central Bank of Jordan (CBJ).
Despite the growing importance of institutional investors in global capital markets and the link between bank earnings management and financial crash risk, little is known about the role of institutional investors in mitigating bank earnings management. We conduct the first international analysis of this issue using a broad sample of banks and institutional investors. We find a negative relation between institutional ownership and bank earnings management, after controlling for the stringency of a country's bank regulations and other relevant bank and country characteristics. Additionally, institutional ownership is more negatively related to earnings management in countries with more-stringent bank disclosure requirements or when ownership is held by domestic rather than foreign institutional investors. Institutional ownership is also more negatively related to earnings management in countries in which insiders extract more private benefits or when ownership is held by institutional blockholders. Our findings have important policy implications regarding institutional investors' engagement with banks.
Purpose
This paper aims to investigate private pension fund investor sentiment against fund performance and cost in an environment of frequent regulatory changes. The analyses are conducted in a low return, high-cost private pension fund market environment, which makes it easier to observe the relationship between investor sentiment to return and cost.
Design/methodology/approach
This paper conducts fixed effect, random effect and random effect within between effect panel data analyses of all Turkish private pension funds from 2011 to 2019. This paper conducts the analyses using aggregate data and subsets based on fund characteristics and pre-post regulation periods.
Findings
When regulations provide compensation and improve market efficiency in a pension fund market, investor focus shifted from performance to cost. Investors allocated assets with respect to return realization when adequately compensated for risk or had favorable cost contract clauses. Consequently, investors in pension funds with lower expected returns and no special fee reduction clauses tended to adopt the strategy of cost minimization.
Research limitations/implications
The overlap of regulatory change periods could complicate the ability to distinguish the impact of any one specific change. The findings therefore cannot be generalized to differently structured markets.
Practical implications
Regulatory changes could lead to a switch of investor objectives. When regulatory changes compensate investors and increase market efficiency, investors objective could switch from performance to cost.
Originality/value
This study investigates investor sentiment in a relatively young private pension fund market, in which the relevant regulatory body ambitiously implements frequent changes in regulation. The selected market is unique in the sense that it has negative real returns and high costs, which make investor focus to return and cost more readily apparent.
The presumption in most discussions of the Basel pillars is that in practice each will prove to reinforce the others. This chapter evaluates this official presumption. It provides a basic overview of the Basel guidelines regarding market discipline and related conceptual issues. It reviews alternative suggestions for contributing to improved bank safety and soundness via enhanced market discipline, including proposals mandating the issuance of subordinated debts. It discusses recent research that encompasses analysis of market discipline within a basic banking model and applies this model to an analysis of the relationship between bank market structure and market discipline. The chapter then considers what the literature tells us about the extent to which markets actually discipline banks and about interactions between market discipline and supervisory discipline applied by government regulators. The chapter concludes by evaluating the market discipline pillar in relation to the Basel capital-standards and supervisory-process pillars.
