Debt Priority Structure, Market Discipline, and Bank Conduct

• 成果类型: Article
• 署名作者: Danisewicz, Piotr; McGowan, Danny; Onali, Enrico; Schaeck, Klaus
• 署名单位: University of Bristol; University of Nottingham; Aston University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhx111
• 发表日期: 2018
• 页码: 4493
• 关键词: agency costs; RISK; deregulation; bankruptcy

摘要

We examine how debt priority structure affects bank funding costs and soundness. Leveraging an unexplored natural experiment that changes the priority of claims on banks' assets, we document asymmetric effects that are consistent with changes in monitoring intensity by various creditors depending on whether creditors move up or down the priority ladder. The enactment of depositor preference laws that confer priority on depositors reduces deposit rates but increases nondeposit rates. Importantly, subordinating nondepositor claims reduces bank risk-taking, consistent with market discipline. This insight highlights a role for debt priority structure in the regulatory framework.