Goyal, V. K. (2005). Market discipline of bank risk: Evidence from subordinated debt contracts. Journal of Financial Intermediation, 14, 318-350. doi:10.1016/j.jfi.2004.06.002

has been cited by the following article:

• TITLE: Market Discipline of Subordinated Debt: Empirical Evidence from Japanese Commercial Banks

  AUTHORS: Young-Soon Hwang, Hong-Ghi Min

  KEYWORDS: Market Discipline; Subordinated Debt; Japanese Commercial Banks; Loan Risk; Stock Investment Risk

  JOURNAL NAME: Journal of Financial Risk Management, Vol.2 No.2, June 10, 2013

  ABSTRACT: We investigate if Subordinated Note and Debenture (SND) holders make banks to take less risk by analyzing balance sheet data of Japanese commercial banks. The cross-section regression shows that banks take less risk as the amount of SNDs increase. Specifically, it is shown that the loan risk measure (the ratio of impaired loans to the total loans) and the stock investment risk measure (the invested stocks over bank capital) have decreased with the increase of SND amounts. These results provide evidence that SNDs are effective instrument for the market discipline.