Market reaction to risky banks: did generous deposit guarantee change it?

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dc.citation.epage1435en_US
dc.citation.issueNumber8en_US
dc.citation.spage1415en_US
dc.citation.volumeNumber36en_US
dc.contributor.authorÖnder, Z.en_US
dc.contributor.authorÖzyildirim, S.en_US
dc.date.accessioned2016-02-08T10:08:17Z
dc.date.available2016-02-08T10:08:17Z
dc.date.issued2008en_US
dc.departmentDepartment of Managementen_US
dc.description.abstractTurkey experienced a massive banking crisis in February 2001, resulting in the loss of more than a thousand managerial jobs and the closure of 21% of all bank branches in the market. In this paper, we study the behavior of the market and the banks in Turkey before the crisis, from 1988 to 2000, which includes the period of full deposit insurance. The empirical results showed that not only depositors but also borrowers reacted negatively to risky banks and punished them even more during the period of generous government guarantee. However, in the same period, banks were found to increase their moral hazard behavior significantly. Although the International Monetary Fund and the World Bank recommend explicit deposit insurance for developing countries, the findings of this paper suggest that deposit insurance may not be an effective policy tool to improve market confidence, and it does not guarantee a stable economic environment even when the market reacts negatively to the moral hazard behavior of banks.en_US
dc.identifier.doi10.1016/j.worlddev.2007.08.007en_US
dc.identifier.issn0305-750X
dc.identifier.urihttp://hdl.handle.net/11693/23051
dc.language.isoEnglishen_US
dc.publisherPergamon Pressen_US
dc.relation.isversionofhttp://dx.doi.org/10.1016/j.worlddev.2007.08.007en_US
dc.source.titleWorld Developmenten_US
dc.subjectDeposit insuranceen_US
dc.subjectMarket disciplineen_US
dc.subjectMoral hazarden_US
dc.subjectTurkeyen_US
dc.subjectBankingen_US
dc.subjectCrisis managementen_US
dc.subjectDeveloping worlden_US
dc.subjectEmpirical analysisen_US
dc.subjectIMFen_US
dc.subjectInsurance systemen_US
dc.subjectMarket conditionsen_US
dc.subjectWorld Banken_US
dc.subjectEurasiaen_US
dc.subjectTurkeyen_US
dc.titleMarket reaction to risky banks: did generous deposit guarantee change it?en_US
dc.typeArticleen_US

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