n this paper, we test for the presence of market discipline in the Swiss deposit market. In particular, we examine whether depositors monitor their banks and withdraw their savings deposits whenever the fundamentals of their bank are no longer satisfactory. We use a panel of bank-specific data on 250 Swiss banks over the period 1987-1998. We find considerable evidence of market discipline, in the sense that depositors are sensitive to bank-specific fundamentals, to institutional differences across bank groups, and to institutional changes in the Swiss depositor protection system.