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Market evidence on the opaqueness of banking firms' assets

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  • Flannery, Mark J.
  • Kwan, Simon H.
  • Nimalendran, M.

Abstract

We assess the market microstructure properties of U.S. banking firms' equity, to determine whether they exhibit more or less evidence of asset opaqueness than similar-sized nonbanking firms. The evidence strongly indicates that large banks (traded on NASDAQ) trade much less frequently despite microstructure characteristics. Problem (noncurrent) loans tend to raise the frequency with which the bank's equity trades, as well as the equity's return volatility. The implications for regulatory policy and future market microstructure research are discussed.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Economics.

Volume (Year): 71 (2004)
Issue (Month): 3 (March)
Pages: 419-460

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Handle: RePEc:eee:jfinec:v:71:y:2004:i:3:p:419-460

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Web page: http://www.elsevier.com/locate/inca/505576

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