market discipline
English
editNoun
editmarket 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.
- 2010 January 28, “From bail-out to bail-in”, in The Economist[2], →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.