北美paper写作--Market constraints on commercial Banks

1、摆渡论文网（）-专业留学生作业辅导中心北美paper写作-Market constraints on commercial BanksMarket discipline means strengthening public supervision of commercial Banks. At present, in terms of strengthening market constraints, the two most emphasized points are: restricting the public sector from dealing with distortions in the way of problematic commercial Banks and enhancing the information disclosure of commercial Banks.A fundamental condition must be met for market mechanisms to play an important role in binding th

2、e banks managers and owners. That is, there will be no automatic financial assistance to troubled Banks and no monetary protection for the Banks owners and main creditors. The arrangement suggests that Banks that have been regulated only to the extent that they are unable to pay should be required to withdraw in time to prevent problems at individual Banks from spreading and harming other Banks. Experience in many countries, for example, suggests that public sector support for troubled Banks is

3、too generous. Although the practice of closing large Banks with the payment of compensation to most depositors is a fear of a general loss of confidence, it is useful to have the Banks owners and main creditors bear a fair share of the financial losses. This would prompt better-informed primary creditors to impose market discipline on weak Banks. The advantage of this arrangement is that not only do big creditors have more money to monitor and influence Banks, but they also have access to more a

4、ccurate information than others.The appropriate role of the central bank lender of last resort is to provide timely short-term financial support to Banks that are illiquid but still solvent. Such loans are an important way to prevent bank panic and runs. Bank panics and runs can make healthy Banks illiquid. And lead to a decline in solvency. In practice, however, such loans often support insolvent Banks. This undermines the market discipline and the profitability of the banking system. The centr

5、al bank did so because it feared a crisis of confidence in the banking system, and it was often hoped that troubled Banks would emerge from the crisis on their own. In order for lenders of last resort to function effectively, without compromising market discipline, the central bank would have to obtain sufficient information from regulators to determine which Banks were losing their solvency in order to provide funds to healthy but illiquid Banks.In the event of a bank failure, the deposit insur

6、ance scheme will compensate certain classes of depositors. However, deposit insurance is prone to moral hazard problems, so it needs to be properly designed. The most effective deposit insurance schemes are limited to protecting small depositors and not covering large depositors and other creditors, including other Banks, in order to encourage market discipline to put pressure on Banks. Insurance coverage can vary from country to country. But a fundamental principle is that it must help curb mor

7、al hazard. The deposit insurance system needs to be adequately funded so that insured depositors can be paid on time and insolvent Banks can be shut down quickly. Credible exit policies for troubled Banks are essential for effective deposit insurance, lender of last resort arrangements, and a sound and competitive banking system. The financial system must be strong enough to keep the problem of failing Banks from spreading to other institutions in order for their exit to proceed smoothly. Banks

8、should be closed until their solvency is severely compromised and their creditors are badly damaged. Even if these conditions are met, regulatory intervention is often needed to bring big Banks out of business, rather than simply citing liquidation. To reduce the political pressure on Banks to exit, the authorities should limit their discretionary powers and adopt rules-based policies.Disclosing information about Banks and their operating environment to the public is an important means to enforc

9、e market discipline. The value of disclosure depends on the credibility and accuracy of the information provided.Banks are often required to publish information on credit and credit risk, such as risk concentration and relationship lending by category. The customer should also be able to obtain quantitative information on the relationship between the loan and total assets, non-performance loans and the lenders provision. The bank should also explain the definition of loan classification, classification standards for non-performing loans, and standards for the treatment of reserves or reserves. In addition, information on loan write-offs and repayments is also important.Liquidity risk can be explained through the balance sheet and the enclosing balance and liability maturity structure. This information should enable the client to distinguish between a more stable core deposit account and a less stable purchasing fund account. The informa

《北美paper写作--Market constraints on commercial Banks》由会员0**分享，可在线阅读，更多相关《北美paper写作--Market constraints on commercial Banks》请在金锄头文库上搜索。