Expected Government Support of Banks and Market Discipline by Shareholders

31 Pages Posted: 23 Jan 2016

See all articles by Angelos A. Antzoulatos

Angelos A. Antzoulatos

University of Piraeus - Department of Banking and Financial Management

Dimitrios Karanastasis

University of Piraeus - Department of Banking and Financial Management

Date Written: January 21, 2016

Abstract

The empirical results, from a sample of about 250 banks worldwide, indicate that the expected government support of banks does not weaken market discipline by shareholders. Specifically, shareholders are not willing to pay more for banks with higher expected support. On the contrary, they are willing to pay less for the riskier banks, despite the expected support. The results also indicate that market discipline strengthened after the eruption of the global financial crisis in 2008.

Keywords: Banks, Credit ratings, Government support, Market discipline, Shareholders

JEL Classification: G21, G24, G28

Suggested Citation

Antzoulatos, Angelos A. and Karanastasis, Dimitrios, Expected Government Support of Banks and Market Discipline by Shareholders (January 21, 2016). Available at SSRN: https://ssrn.com/abstract=2719781 or http://dx.doi.org/10.2139/ssrn.2719781

Angelos A. Antzoulatos (Contact Author)

University of Piraeus - Department of Banking and Financial Management ( email )

80 Karaoli & Dimitriou Str.
18534 Piraeus, 185 34 -GR
Greece

Dimitrios Karanastasis

University of Piraeus - Department of Banking and Financial Management ( email )

80 Karaoli & Dimitriou Str.
18534 Piraeus, 185 34 -GR
Greece

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
70
Abstract Views
621
rank
380,050
PlumX Metrics