Can The Unsophisticated MarketProvide Discipline?

Caprio, Gerard ; Honohan, Patrick

World Bank, Washington, D.C.

关键词: ACCOUNTING;    ACQUISITION COSTS;    ASSET PRICES;    AUDITING;    AUDITORS;   

DOI  :  10.1596/1813-9450-3364
RP-ID  :  WPS3364

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The authors question the widespreadbelief that market discipline on banks cannot be effectivein less developed financial environments.There is nosystematic tendency for low-income countries to lack theprerequisites for market discipline. Offsetting factors tothe weaker market and formal information infrastructures are(1) the less complex character of banking business inlow-income countries; (2) the growing internationalizationof these markets through the presence of foreign banks, andthrough international trading of the debt and equity oflocally-controlled non-government banks; and (3) the smallersize of the business and financial community. However,continuing dominance by public sector banks in somecountries limits the likely development of marketmonitoring, which is clearly a cause for concern, given thedisappointing record of governments around the world asmonitors of their self-owned banks.Countries should buildon this potential for market discipline by limiting the roleof explicit deposit guarantees, reducing state ownership ofbanks where it is prevalent, and not putting all their eggsin the supervisory basket. Greater disclosure, for example,of how risk taking is rewarded and how rating agencies earntheir fees would support the development of better marketmonitoring. Enhancing market discipline (pillar three) ismuch more likely to be of use in most developing countriesthan addressing the refinements of the risk-weighting systemof Basel II's first pillar.