What Do Depositors Know About Risk?

26 Pages Posted: 3 Oct 2011 Last revised: 12 Feb 2012

See all articles by Selcuk Caner

Selcuk Caner

Bilkent University - Faculty of Business Administration

Suheyla Ozyildirim

Bilkent University - Faculty of Business Administration

Ayse Ece Ungan

Bilkent University - Faculty of Business Administration

Date Written: September 2, 2011

Abstract

The limited success of bank supervision can be better understood by taking into consideration the country conditions and market-based measures that are e ective in constraining bank risk. Comparing depositors' reaction in two countries, the Russian Federation and Turkey, we nd di erentiated reaction by depositors to bank risks. In the Russian Federation, depositors weakly respond to increased bank risks only with the possibility of withdrawing funds. However, in Turkey depositors exercise both quantity and price discipline on the banks which facilitates in identifying risky banks. The ndings of this study suggest that the experiences of depositors in both countries seem to play important role in reliance to market discipline in the future.

Keywords: Bank Risk, Monitoring, Large Depositors, Market Discipline

JEL Classification: G21, G32

Suggested Citation

Caner, Selcuk and Ozyildirim, Suheyla and Ungan, Ayse Ece, What Do Depositors Know About Risk? (September 2, 2011). Midwest Finance Association 2012 Annual Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1921372 or http://dx.doi.org/10.2139/ssrn.1921372

Selcuk Caner (Contact Author)

Bilkent University - Faculty of Business Administration ( email )

06533 Bilkent, Ankara
Turkey
0 312 290 18 60 (Phone)
0 312 266 49 58 (Fax)

Suheyla Ozyildirim

Bilkent University - Faculty of Business Administration ( email )

06800 Bilkent, Ankara
Turkey

Ayse Ece Ungan

Bilkent University - Faculty of Business Administration ( email )

06533 Bilkent, Ankara
Turkey
0 312 442 21 40 (Phone)
0 312 442 41 61 (Fax)

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