Showing papers in "Journal of Financial Intermediation in 2006"

TL;DR: In this article, the effectiveness of market discipline in limiting excessive risk-taking by banks is investigated using a large cross-country panel data set consisting of observations on 729 individual banks from 32 different countries over the years 1993 to 2000.

TL;DR: The authors showed that the marginal impact of introducing Basel II depends strongly on the extent to which market discipline leads banks to vary lending standards procyclically in the absence of binding regulation.

TL;DR: In this article, the authors formulate and test hypotheses about the role of bank ownership types-foreign, state-owned, and private domestic banks-in banking relationships, using data from India.

TL;DR: In this article, the authors find a significant and positive relationship between bank soundness (measured with Moody's financial strength ratings) and compliance with principles related to information provision, and emphasize the importance of transparency in making supervisory processes effective and strengthening market discipline.

TL;DR: In this article, the authors investigate how the duration and scope of the bank-borrower relationship affect the decision to secure line-of-credit and non-line-of credit loans.

TL;DR: In this article, the authors examine the legal and business environments, financing channels, and governance mechanisms of various types of firms in India and compare them to those from other countries and find that informal governance mechanisms such as reputation, trust, and relationships are more important than formal mechanisms (such as courts) in resolving disputes, overcoming corruption, and supporting growth.

TL;DR: In this paper, the authors identify factors that influence decisions about a country's financial safety net, using a new dataset on 170 countries covering the 1960-2003 period Specifically, they focus on how outside influences, economic development, crisis pressures, and political institutions affect deposit insurance adoption and design, finding that pressure to emulate developed country regulatory frameworks and power-sharing political institutions dispose a country toward adopting design features that inadequately control risk-shifting.

TL;DR: In this paper, the interaction between legal shareholder protection, managerial incentives, monitoring, and ownership concentration is analyzed, and it is shown that when legal protection facilitates monitoring, better laws strengthen the monitoring incentives and better laws weaken the incentive to monitor.

TL;DR: In this article, the authors study the behavior of a financial institution subject to capital requirements based on self-reported VaR measures, as in the Basel Committee's Internal Models Approach and find that VaR-based capital requirements can be very effective not only in curbing portfolio risk but also in inducing revelation of this risk.

TL;DR: Li et al. as mentioned in this paper used a panel data set (1997-1999) for 235 publicly listed companies in the People's Republic of China (PRC) to test empirically whether the purchase of property insurance mitigates principal-agent incentive conflicts.

TL;DR: In this article, the authors investigate the relationship between the transparency of banks and the fragility of the banking system and show that information-based bank runs may be inefficient because the deposit contract designed to provide liquidity induces depositors to have excessive incentives to withdraw.

TL;DR: In this paper, the authors observe a rival winning in the interbank competition for lending to a firm, and infer that the firm may be more promising than they had thought, from this consideration, they loosen their creditworthiness tests and lower the interest rates they offer in the next lending competition for the firm.

TL;DR: In this article, the authors investigated whether lockup agreements in France and Germany mitigate problems of agency and asymmetric information, and found that lockup agreement are not only highly diverse across firms but also across the different shareholders of a single firm as most firms have different agreements in place for executives, non-executives and venture capitalists.

TL;DR: In this article, the authors show that if accounting considerations alone drive option grants, a typical firm in their sample incurs between 50 cents and one dollar of real costs in order to increase reported pre-tax net income by one dollar.

TL;DR: In this article, the authors examined the effect of macroeconomic announcements on equity index markets using high frequency transactions data for the regular and E-mini S&P 500 index futures contracts.

TL;DR: The authors found that households with equity loans are relatively more sensitive to changes in interest rates, while those with equity lines are less sensitive to appreciation in property value. But they did not find significant differences in the prepayment and default probabilities of home equity loans and lines.

TL;DR: In this article, the authors investigate the relation between price discreteness and the number of dealers in a dealer market and find that a decrease in tick size benefits dealers and tends to hurt investors when the number for a stock is small.

TL;DR: In this article, the role of the financial environment in the stock market valuation of research and development (R&D) spending by firms was investigated and the importance of both relative to the size of the economy and the degree of financial development was examined.

TL;DR: In this paper, the authors provide a framework to analyze voluntary and mandatory disclosure, and show that better legal shareholder protection goes together with higher disclosure standards and that harmonization of disclosure standards may be detrimental.

TL;DR: In this paper, the optimal allocation of debt, equity, and control rights depends on which disciplinary action is more efficient, i.e., when the efficient action is managerial replacement, then control rights should be allocated to equity holders, and capital structure should consist of equity and long-term debt.

TL;DR: In this article, the authors examine how quote aggressiveness affects dealer market share and whether the practice of internalization mitigates the impact of quote aggressivity and find that aggressive quotes are more effective in raising dealer's market share in stocks with a less competitive market structure.

TL;DR: In this article, the authors adopt the winner's curse argument and show that better-informed investors get better allocations by being better able to pick underpriced issues, even though in equilibrium investors' bids fully reveal their information.

TL;DR: This article examined the change in the value of the underlying stock associated with long-term option introduction and found that the abnormal returns associated with LEAPS (Long-Term Equity Anticipation Security) introductions indicate a decline in firm value even after controlling for the endogenous nature of the listing decision.

TL;DR: In this article, the authors examine insider transfer trading of banking companies before and after their listing on the Taiwan Stock Exchange and uncover significantly negative abnormal returns after insiders announce their plans to transfer stocks, as well as significant price reversals following the subsequent disclosure of unfulfilled transfers.

TL;DR: In this article, the authors analyze whether a profit maximizing exchange nonetheless chooses to open markets for speculative securities and if so, how to circumvent the problem of market failure and find that the optimal financial innovation takes two forms.

TL;DR: In this paper, the authors demonstrate how the introduction of spread futures can, by changing the relative trading patterns of hedgers and informed traders, affect equilibrium bid-ask spreads, improve hedger welfare, and potentially improve market-maker expected profits.