This study shows that the relative amount of capital and risk-taking compared to peers has influence on the funding cost of financial institutions. This suggests that these two factors could work as tools for achieving financial stability by means of self-regulatory practices given that financial institutions would have incentives to increase capital and refrain from taking excessive risk. Besides contributing to the policy-making debate on the viability of market discipline in banking regulation, this paper also opens avenues for further investigations in this area.
|Number of pages||11|
|Journal||Journal of Risk Management in Financial Institutions|
|Publication status||Published - 1 Dec 2020|
- funding cost
- bank capital