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English
Noun
market discipline (uncountable)
- (banking, economics) The forces in a free market which tend to control and limit the riskiness of a financial institution's investment and lending activities, such as the concern of depositors for the safety of their deposits and the concern of bank investors for the safety and soundness of their institutions.
2002 June 8, John Eatwell, “Basel II: the regulators strike back”, in The Observer, →ISSN:Handing financial regulation back to ‘market discipline’ will nullify the progress that has been made to create a system of international regulation.
2010 January 28, “From bail-out to bail-in”, in The Economist, →ISSN:A “bail-in” process for bank resolution is a potentially powerful “third option” that confronts this problem head-on. […] If done correctly it should strengthen market discipline on banks and reduce the potential for systemic risk.
2011 May 19, Jill Treanor, “Spotlight falls on City watchdog Sants”, in The Guardian, →ISSN:The FSA believed in ‘market discipline’ and failed to get its message across. The PRA will be different, its boss promises[.]
2011 July 4, “Was it worth it?”, in The Economist, →ISSN:Suppose that Greece had never adopted the Euro and the terms of its external borrowing had remained subject to “market discipline”, as it had been in the 1990s.