Scholarlink

<p>This study examines the effect of market discipline on bank efficiency and explores whether Big Four audit firms moderate this relationship. Using a panel dataset of 27 Vietnamese commercial banks from 2007 to 2023, bank efficiency is estimated using the stochastic frontier approach (SFA), which overcomes the limitations of conventional stability proxies, such as the Z-score, in capturing the multidimensional nature of bank efficiency. The findings show that both depositor and borrower market discipline are associated with lower bank inefficiency. Specifically, depositors tend to demand higher interest rates from poorly managed banks, thereby exerting pressure on managers to improve performance and enhance stability. Similarly, borrowers appear to discipline riskier banks by shifting toward financially sound institutions, demanding more favourable lending terms, or reducing their borrowing demand. The results further indicate that Big Four auditors enhance bank efficiency by improving transparency, reducing information asymmetry, and strengthening market confidence. Moreover, the interaction between market discipline and Big Four audits is associated with a further reduction in bank inefficiency. This suggests that reputable external auditors may reinforce the disciplinary role of market participants, particularly in settings where regulatory effectiveness is limited. These results remain robust after controlling for both the Global Financial Crisis and the COVID-19 pandemic, lending further support to the validity of the findings. Overall, the study offers important implications for regulators and banking practitioners aiming to strengthen governance mechanisms and foster a more resilient banking system.</p>

错误：搜索内容不能为空，请输入英文关键词
错误：关键词超出字数限制，请精简
高级检索

The relationship between market discipline, Big Four audit firms, and bank efficiency: evidence from a transitional economy

  • 期刊论文

  • 发表日期：

    2026年7月20日

查看全文
  • Dat T. Nguyen,
  • Tu D. Q. Le,
  • Linh Tran

摘要

This study examines the effect of market discipline on bank efficiency and explores whether Big Four audit firms moderate this relationship. Using a panel dataset of 27 Vietnamese commercial banks from 2007 to 2023, bank efficiency is estimated using the stochastic frontier approach (SFA), which overcomes the limitations of conventional stability proxies, such as the Z-score, in capturing the multidimensional nature of bank efficiency. The findings show that both depositor and borrower market discipline are associated with lower bank inefficiency. Specifically, depositors tend to demand higher interest rates from poorly managed banks, thereby exerting pressure on managers to improve performance and enhance stability. Similarly, borrowers appear to discipline riskier banks by shifting toward financially sound institutions, demanding more favourable lending terms, or reducing their borrowing demand. The results further indicate that Big Four auditors enhance bank efficiency by improving transparency, reducing information asymmetry, and strengthening market confidence. Moreover, the interaction between market discipline and Big Four audits is associated with a further reduction in bank inefficiency. This suggests that reputable external auditors may reinforce the disciplinary role of market participants, particularly in settings where regulatory effectiveness is limited. These results remain robust after controlling for both the Global Financial Crisis and the COVID-19 pandemic, lending further support to the validity of the findings. Overall, the study offers important implications for regulators and banking practitioners aiming to strengthen governance mechanisms and foster a more resilient banking system.