The Third Pillar of the Basel Accord: Evidence of borrower discipline in the Kyrgyz banking system
We empirically study the asset side of market discipline in the banking system of the Kyrgyz Republic, examining whether borrowers are willing to pay higher interest rates to high-quality banks. Based on dynamic panel models and a dataset with bank information from 23 banks over the period 2010–2012...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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SAGE Publishing
2016-07-01
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| Series: | Journal of Eurasian Studies |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S1879366516300082 |
| _version_ | 1818496261824708608 |
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| author | Edgar Demetrio Tovar-García Ruslana Kozubekova |
| author_facet | Edgar Demetrio Tovar-García Ruslana Kozubekova |
| author_sort | Edgar Demetrio Tovar-García |
| collection | DOAJ |
| description | We empirically study the asset side of market discipline in the banking system of the Kyrgyz Republic, examining whether borrowers are willing to pay higher interest rates to high-quality banks. Based on dynamic panel models and a dataset with bank information from 23 banks over the period 2010–2012, our findings suggest the presence of market discipline induced by borrowers. In other words, banks with higher capital ratios and liquidity charge higher interest rates on loans. This result has several implications for the banking policy in Kyrgyzstan, where we can recommend to policymakers a disclosure policy following the Third Pillar of Basel III, because not only can the bank's creditors use bank information to penalize the excessive bank risk, but borrowers can also use this information to discipline their banks. |
| first_indexed | 2024-12-10T18:31:09Z |
| format | Article |
| id | doaj.art-13bc55b00b6c40c284fdbbaf9682b882 |
| institution | Directory Open Access Journal |
| issn | 1879-3665 |
| language | English |
| last_indexed | 2024-12-10T18:31:09Z |
| publishDate | 2016-07-01 |
| publisher | SAGE Publishing |
| record_format | Article |
| series | Journal of Eurasian Studies |
| spelling | doaj.art-13bc55b00b6c40c284fdbbaf9682b8822022-12-22T01:37:56ZengSAGE PublishingJournal of Eurasian Studies1879-36652016-07-017219520410.1016/j.euras.2016.02.002The Third Pillar of the Basel Accord: Evidence of borrower discipline in the Kyrgyz banking systemEdgar Demetrio Tovar-GarcíaRuslana KozubekovaWe empirically study the asset side of market discipline in the banking system of the Kyrgyz Republic, examining whether borrowers are willing to pay higher interest rates to high-quality banks. Based on dynamic panel models and a dataset with bank information from 23 banks over the period 2010–2012, our findings suggest the presence of market discipline induced by borrowers. In other words, banks with higher capital ratios and liquidity charge higher interest rates on loans. This result has several implications for the banking policy in Kyrgyzstan, where we can recommend to policymakers a disclosure policy following the Third Pillar of Basel III, because not only can the bank's creditors use bank information to penalize the excessive bank risk, but borrowers can also use this information to discipline their banks.http://www.sciencedirect.com/science/article/pii/S1879366516300082Basel accordmarket disciplineloan marketbank riskKyrgyzstan |
| spellingShingle | Edgar Demetrio Tovar-García Ruslana Kozubekova The Third Pillar of the Basel Accord: Evidence of borrower discipline in the Kyrgyz banking system Journal of Eurasian Studies Basel accord market discipline loan market bank risk Kyrgyzstan |
| title | The Third Pillar of the Basel Accord: Evidence of borrower discipline in the Kyrgyz banking system |
| title_full | The Third Pillar of the Basel Accord: Evidence of borrower discipline in the Kyrgyz banking system |
| title_fullStr | The Third Pillar of the Basel Accord: Evidence of borrower discipline in the Kyrgyz banking system |
| title_full_unstemmed | The Third Pillar of the Basel Accord: Evidence of borrower discipline in the Kyrgyz banking system |
| title_short | The Third Pillar of the Basel Accord: Evidence of borrower discipline in the Kyrgyz banking system |
| title_sort | third pillar of the basel accord evidence of borrower discipline in the kyrgyz banking system |
| topic | Basel accord market discipline loan market bank risk Kyrgyzstan |
| url | http://www.sciencedirect.com/science/article/pii/S1879366516300082 |
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