Sophisticated discipline in a nascent deposit market: evidence from post-communist Russia

Arbeitspapier

Using a database from post-communist, pre-deposit-insurance Russia, we demonstrate the presence of quantity-based sanctioning of weaker banks by both firms and households, particularly after the financial crisis of 1998.Evidence for the standard form of price discipline, however, is notably weak.We estimate the deposit supply function and show that, particularly for poorly capitalized banks, interest rate increases exhibit diminishing, and eventually negative, returns in terms of deposit attraction.These findings are consistent with depositors interpreting the deposit rate itself as a complementary proxy of otherwise unobserved bank-level risk.

Object Details

• ISBN: 952-462-834-1
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BOFIT Discussion Papers ; No. 13/2006

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
• Subject: market discipline ; deposit market ; transition ; Russia

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Karas, Alexei ; Pyle, William ; Schoors, Koen
• Event: Veröffentlichung
• (who): Bank of Finland, Institute for Economies in Transition (BOFIT)
• (where): Helsinki
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/212585
• Last update: 10.03.2025, 11:42 AM CET