Depositor discipline during crisis: Flight to familiarity or trust in local authorities?
We analyze whether bank familiarity affects depositor behavior during financial crisis. Familiarity is measured by regional or local cues in the bank’s name. Depositor behavior is measured by the depositor’s sensitivity to observable bank risk (depositor discipline). Using 2001–2010 bank-level and region-level data for Russia, we find that depositors of familiar banks become less sensitive to bank risk during a financial crisis relative to depositors of unfamiliar banks. To validate that our results stem from a flight to familiarity during crisis and not from implicit guarantees from regional governments, we split our sample along the lines of regional affinity and trust in local governments. The flight to familiarity effect is strongly confirmed in the subsample of regions with strong regional affinity, while the effect is absent in the subsample of regions with more trust in regional and local governments, lending support to the thesis that our results are driven by a flight to familiarity rather than by implicit guarantees.
We aim to discover the relationship between market discipline and banking system transparency using the cross-country data (1990-2003) with Nier index and index based on World Bank surveys' data. We show that measures aimed to increase transparency, not being accompanied with requirements related to information availability and/or interpretability, may be not efficient in reaching the goal of market discipline stimulation.
In this paper, we model the deposit market with costly information on bank risks. The model adds to the volume of literature related to the Diamond Dybvig mod el and related models of information based bank runs. The inclusion of costly information signals indicates that depositors must decide whether to pay for information regarding changes in the riskiness of banking activities; these costs may involve, for instance, time and other resources needed to find and read financial information. We show that an efficient bank run is the only equilibrium even in case of non negative information costs. To ensure the uniqueness of the efficient bank run equilibrium it is enough to lower the costs for at least one group of the depositors or introduce the deposit insurance system with co insurance.
The primary goal of enhancing banking system transparency by introducing additional disclosure requirements suggested by Basel II is to provide market participants with additional incentives to monitor their banks. This article attempts to discover the statistically significant relationship between quantitative market discipline and banking system transparency using cross-country data from 1990 to 2003. We use the Nier index, as well as an index constructed using World Bank 'Bank Regulation and Supervision' data, to measure banking system transparency. We found no statistically significant influence of banking system transparency on market discipline. Our result implies that measures designed to increase transparency not accompanied by requirements related to information availability and/or interpretability may not be effective in enhancing market discipline.
The article dealsthe following questions to answer: • Do any mechanisms of market discipline exist in Russian market for personal deposits? We analyze the quantitative mechanisms: disciplining by quantity and by maturity shifts. • Did the DIS introduction influence depositors’ investment strategies?
Smoking is a problem, bringing signifi cant social and economic costs to Russiansociety. However, ratifi cation of the World health organization Framework conventionon tobacco control makes it possible to improve Russian legislation accordingto the international standards. So, I describe some measures that should be taken bythe Russian authorities in the nearest future, and I examine their effi ciency. By studyingthe international evidence I analyze the impact of the smoke-free areas, advertisementand sponsorship bans, tax increases, etc. on the prevalence of smoking, cigaretteconsumption and some other indicators. I also investigate the obstacles confrontingthe Russian authorities when they introduce new policy measures and the public attitudetowards these measures. I conclude that there is a number of easy-to-implementanti-smoking activities that need no fi nancial resources but only a political will.
One of the most important indicators of company's success is the increase of its value. The article investigates traditional methods of company's value assessment and the evidence that the application of these methods is incorrect in the new stage of economy. So it is necessary to create a new method of valuation based on the new main sources of company's success that is its intellectual capital.