Market discipline and deposit guarantee: Evidence from Australian banks

Xing Yan, Michael Thomas Skully, Katherine Jane Avram, Thi Bao Tram Vu

    Research output: Contribution to journalArticleResearchpeer-review

    Abstract

    This study examines depositor market discipline of Australian banks and its interaction with the 2008 deposit and wholesale funding guarantee. Prior to 2008 market discipline is found for Australian-incorporated banks. Depositors did not distinguish between major and small banks, but some differences in the degree of market discipline were found for foreign bank subsidiaries. Following the introduction of the 2008 guarantees, market discipline was reduced except for non-household depositors at banks that did not access the wholesale guarantee. Market discipline is also evidenced at foreign bank branches, but weaker for those accessing the wholesale guarantee.
    Original languageEnglish
    Pages (from-to)431 - 457
    Number of pages27
    JournalInternational Review of Finance
    Volume14
    Issue number3
    DOIs
    Publication statusPublished - 2014

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