Market Discipline in Turkey Before and After the 2001 Financial Crisis
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Levent Bulut
This paper compares the effectiveness of market discipline mechanisms in the banking sector before and after the 2001 financial crisis in Turkey. It employs an empirical model that incorporates the contemporaneous feedback effects between deposits growth rate and the implicit interest rate. Using 3SLS procedure, the results show that market disciplinary forces in Turkey have been effective both before and after the 2001 financial crisis. The findings show that the effect of the implicit interest rate on deposits becomes more sensitive to bank risk fundamentals after the 2001 financial crisis. Depositors, on the other hand, do not change their behavior in the aftermath of the crisis which can be explained by an implicit “too-big-to-fail'' protection at work.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Market Discipline in Turkey Before and After the 2001 Financial Crisis
- The Turkish Stock Market Integration with Developed and Emerging Countries' Stock Markets: Evidence from Cointegration Tests with and without Regime Shifts
- Can Individual/Naive Investors Infer Valuable Information from Institutional Investors' Trades? Evidence from the Casablanca Stock Exchange
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Articles in the same Issue
- Article
- Market Discipline in Turkey Before and After the 2001 Financial Crisis
- The Turkish Stock Market Integration with Developed and Emerging Countries' Stock Markets: Evidence from Cointegration Tests with and without Regime Shifts
- Can Individual/Naive Investors Infer Valuable Information from Institutional Investors' Trades? Evidence from the Casablanca Stock Exchange
- Examining the Effects of Islamic Beliefs on the Valuation of Financial Institutions in the United Arab Emirates
