دانلود رایگان مقاله بانک های تعاونی، نظم و انضباط اینترنت و بازار

Abstract

This paper analyses market discipline mechanisms at Polish cooperative banks within the special context of their internet activity. I argue that cooperative banks’ depositors punish more risky banks for their bad behavior by withdrawing deposits. The findings demonstrate that a greater emphasis could be placed on stimulating market discipline at cooperative banks because a large number of these institutions hampers their regulatory discipline. To strengthen the market discipline mechanisms, regulators should promote internet activity at cooperative banks and among their depositors, as well as require banks to present financial information on their websites and to adopt online banking systems.

5. Concluding remarks

Market discipline has the potentialto increase financial stability in the banking sector. This potential is observed because depositors’ risk aversion encourages banks to reduce risk, that is, to select safer asset portfolios and increase equity levels. The market discipline mechanism has been extensively studied in the literature but only to a minor extent in the case of cooperative banks. The article fills the gap by analyzing depositors’ reactions to cooperative banks’ risk in Poland in the context of the banks’ internet activity. The results allow us to draw two major conclusions. First, although cooperative banks serve less financially sophisticated customers from mostly rural areas and small cities,their depositors are able to appropriately distinguish between less risky and more risky institutions. Second, more internet-active banks face stronger market discipline, and their depositors pay special attention to banks’ equity levels. The reasons why this situation arises are twofold. A bank’s extensive internet activity is a reflection of its eagerness to present information about itself, i.e., it increases transparency, especially if a bank publishes its financial statements for a longer period on its website. In addition, the adoption of online banking systems and presenting detailed information about the deposit offer on the bank’s website boost deposit mobility. The availability of an online banking system can be thus treated as an additional tool with which depositors can effectively discipline a bank.