Finance and Economics Discussion Series - Testing for Market Discipline in the European Banking Industry: Evidence from Subordinated Debt Issues - Bog

Finance and Economics Discussion Series - Testing for Market Discipline in the European Banking Industry: Evidence from Subordinated Debt Issues - And

The question of whether private investors can rationally discriminate between the risk taken by banks is empirically investigated by testing the risk sensitivity of European banks' subordinated notes and debentures (SND) spreads. A unique dataset of issuance spreads, issues and issuers rating, accounting and market measures of bank risk is used for a sample of European banks' SND issued during the 1991-2000: Q1 period. Moody's Bank Financial Strength (MBFS) and FitchIBCA Individual (FII) ratings..