Public Disclosure and Bank Failures

This paper examines how public disclosure of banks' risk exposure affects banks' risk-taking incentives and assesses how the presence of informed depositors influences the soundness of the banking system. It finds that, when banks have complete control over the volatility of their loan por...

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Bibliographic Details
Main Author: Levy Yeyati, Eduardo
Other Authors: Cordella, Tito
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 1997
Series:IMF Working Papers
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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520 |a This paper examines how public disclosure of banks' risk exposure affects banks' risk-taking incentives and assesses how the presence of informed depositors influences the soundness of the banking system. It finds that, when banks have complete control over the volatility of their loan portfolios, public disclosure reduces the probability of banking crises. However, when banks do not control their risk exposure, the presence of informed depositors may increase the probability of bank failures