Market Discipline and Deposit Guarantee: Evidence from Australian Banks

27 Pages Posted: 28 Aug 2014

See all articles by Xing Yan

Xing Yan

Monash University - Department of Banking and Finance

Michael T. Skully

Monash University - Department of Banking and Finance; Financial Research Network (FIRN)

Katherine Avram

Monash University

Tram Vu

Monash University - Monash Business School - Department of Banking and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: September 2014

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 Australianā€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 nonhousehold 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.

JEL Classification: G21, G28

Suggested Citation

Yan, Xing and Skully, Michael T. and Avram, Katherine and Vu, Tram, Market Discipline and Deposit Guarantee: Evidence from Australian Banks (September 2014). International Review of Finance, Vol. 14, Issue 3, pp. 431-457, 2014. Available at SSRN: https://ssrn.com/abstract=2488234 or http://dx.doi.org/10.1111/irfi.12028

Xing Yan

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia
+61 3 99034077 (Phone)

Michael T. Skully

Monash University - Department of Banking and Finance ( email )

900 Dandenong Road
Caulfield East, Victoria 3145
Australia
+61 3 9903 2407 (Phone)
+61 3 9903 1443 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Katherine Avram

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Tram Vu

Monash University - Monash Business School - Department of Banking and Finance ( email )

Melbourne
Australia

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