Market Discipline

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Dictionary Says

Definition of 'Market Discipline'

The onus on the banks, financial institutions and sovereigns to conduct business while considering the risks to their stakeholders. Market discipline is a market-based promotion of the transparency and disclosure of the risks associated with a business or entity. It works in concert with regulatory systems to increase the safety and soundness of the market 
Investopedia Says

Investopedia explains 'Market Discipline'

The risks associated with partial ownership in a company can decrease the likelihood of involvement in the market. Market discipline increases the information available to the public by encouraging the release of timely information detailing a company's assets, liabilities and general financial information. This reduces the uncertainty and promote the function of the market as an exchange between lenders and borrowers.

For example, the capital requirements for a bank might be to keep 1% in reserves. Market discipline, on the other hand, encourages banks to keep a higher amount to reduce their liquidity risks and increase the confidence of their depositors.
Search results for

'Market Discipline'

  • Basel II Accord To Guard Against Financial Shocks

    http://www.investopedia.com/articles/07/basel2.asp
    ... Basel II is Three Pillars Basel II has three pillars: minimum capital, supervisor
    review and market discipline. Copyright © 2007 Investopedia.com. Figure 1. ...

  • How Market Psychology Drives Technical Indicators

    http://www.investopedia.com/articles/trading/02/121602.asp
    How Market Psychology Drives Technical Indicators. ... Mad Money ... Mad Market?).
    Advertisement - Article continues below. The Directional ...

  • Momentum Trading With Discipline

    http://www.investopedia.com/articles/trading/03/092403.asp
    ... Momentum trading requires a massive display of discipline, a rare personality attribute ...
    trading on momentum, uses one indicator to measure market inertia and ...

  • 5 Tips For Diversifying Your Portfolio

    http://www.investopedia.com/articles/03/072303.asp
    ... For establishing a strategy that tempers potential losses in a bear market, the
    investment community preaches the same thing that the real estate market ...

  • The Market Participant Playbook

    http://www.investopedia.com/articles/trading/08/institutional-effect.asp
    ... Filed Under » Active Trading, Economics, Hedge Funds, Retirement. Successful stock
    market trading requires experience, discipline and technical knowledge. ...

  • The Risks Of Investing In Emerging Markets

    http://www.investopedia.com/articles/basics/11/risks-investing-in-emerging-markets.asp
    ... Developed nations tend to follow a free market discipline of low government
    intervention, whereas emerging market businesses are often privatized upon demand. ...

  • Play The Market Like Tiger Plays Golf

    http://www.investopedia.com/articles/basics/09/tiger-woods-investing-lessons.asp
    ... incorrectly invest just for the sake of investing - without any discipline or specific ...
    of management and the level of difficulty of the current market layout. ...

  • Forex: World's Biggest Market A Relative Newcomer

    http://www.investopedia.com/articles/forex/10/forex-market-history.asp
    ... market using futures being launched out of Chicago in 1972. (For more on the US
    stagflation problem, see Stagflation, 1970s Style.) Forex and Fiscal Discipline ...

  • The Importance Of Trading Psychology And Discipline

    http://www.investopedia.com/articles/trading/02/110502.asp
    ... They also, by extension, need discipline, so that they stick with previously
    established ... bad news comes about a certain stock or the general market, it's not ...

  • Top Reasons Forex Traders Fail

    http://www.investopedia.com/articles/forex/10/top-reasons-forex-traders-fail.asp
    ... (Find out how your mindset can play a larger role in your success than market
    influences can, read Trading Psychology And Discipline and Momentum Trading with ...

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