The global financial crisis underlined that sound and effective bank regulation is vital to financial stability … outbreak. The crisis reflected the failure of regulatory authorities to keep pace with financial innovation. Bank supervision … had been weak by any measure. Supervisors did not conduct regular onsite bank inspections or examinations of sufficient …

bank-specific default-risk variables. Discipline is measured by estimating a supply of deposit funds function at Thai banks … from 1992 to 1997. The results show that supply decreases as bank-specific risk increases. Also, the sensitivity of funds … to changes in bank-specific risk increases as systemic risk rises. Additionally, depositors decrease their sensitivity to …