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Transparency and the disclosure of risk information in the banking sector

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Author Info
Philip M. Linsley
Philip J. Shrives

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Abstract

The essence of any bank is that it is a risktaking enterprise and therefore, as a part of good corporate governance, it is expected that relevant risk-related information will be released to the marketplace. Currently, however, it is suggested that there is insufficient disclosure of risk information by banks and as a consequence Pillar 3 of Basel II lays out a comprehensive framework for risk disclosures with the intention that this will enable stakeholders to assess the risk pro.le of a bank. In addition, one outcome of the UK company law review is that there will be a requirement for all quoted companies to discuss risks and uncertainties within the annual report. This paper analyses these risk disclosure requirements while also reviewing current bank disclosure practices within the context of this risk disclosure debate. The important issues of disclosure of forward-looking risk information, location of disclosure and proprietary risk information are also discussed together with their implications for the proposed disclosure requirements.

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Publisher Info
Article provided by Emerald Group Publishing in its journal Journal of Financial Regulation and Compliance.

Volume (Year): 13 (2005)
Issue (Month): 3 (July)
Pages: 205-214
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Handle: RePEc:eme:jfrcpp:v:13:y:2005:i:3:p:205-214

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Related research
Keywords: Accounting; Annual report; Basel II; Disclosure; Risk;

Cited by:
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  1. Bischof, Jannis & Wüstemann, Jens, 2007. "How Does Fair Value Measurement under IAS 39 Affect Disclosure Choices of European Banks?," Sonderforschungsbereich 504 Publications 07-75, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
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