Depositor behavior and market discipline in Colombia

This study examines how depositors choose among different banks and over time in Colombia, focusing on whether they discipline bank behavior. By controlling for a more comprehensive set of risk/return factors, the study improves upon conventional market discipline tests. Panel data estimations for 1...

Full description

Autores:
Barajas E., Adolfo
Steiner Sampedro, Roberto
Tipo de recurso:
Work document
Fecha de publicación:
2001
Institución:
Universidad de los Andes
Repositorio:
Séneca: repositorio Uniandes
Idioma:
eng
OAI Identifier:
oai:repositorio.uniandes.edu.co:1992/7925
Acceso en línea:
http://hdl.handle.net/1992/7925
Palabra clave:
Banking system
Market discipline
Deposit insurance
Colombia
Seguros de depósitos bancarios - Colombia
Instituciones financieras - Colombia
Política monetaria - Colombia - 1985-1999
G21
Rights
openAccess
License
http://creativecommons.org/licenses/by-nc-nd/4.0/
Description
Summary:This study examines how depositors choose among different banks and over time in Colombia, focusing on whether they discipline bank behavior. By controlling for a more comprehensive set of risk/return factors, the study improves upon conventional market discipline tests. Panel data estimations for 1985-99 show that depositors prefer banks with stronger fundamentals, and that banks tend to improve their fundamentals after being "punished" by depositors. Banks with stronger fundamentals benefit from lower interest costs and higher lending rates. Market (or "regulatory") discipline therefore appears to exist in Colombia, perhaps thanks to certain key design features of the deposit insurance scheme.