# Financial market disciplining function (disciplining function of financial markets)

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- Post ID: 588631
- Modified: 2023-07-25T21:01:45+00:00
- Language: en

## Definition

Unless otherwise defined, the disciplining function of financial markets refers to the pressure exerted by the international financial market on governments to limit their public spending and debt. - Empirical evidence shows that such disciplining often fails to materialize or materializes too late. Indeed, if the supply on the international financial markets is abundant, then every customer with a sorry rating will be served. Before the subprime crisis, many emerging markets were able to borrow money without any problems: significantly, usually shortly before a sovereign default. Often - as in the case of Turkey in the 1990s - financial markets enable irresponsible governments to indulge in a deficit spending rush, as it were. By the time market discipline kicked in, it was in most cases already too late. - See Financial Crisis, Financial Market Analysis, Greek Crisis, Market Failure, Repatriation Effect. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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- Generator: Merk Knowledge 2.0.0