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Impact of greater bank disclosure amidst a banking crisis

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Author Info
John S. Jordan
Joe Peek
Eric S. Rosengren

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Abstract

Banking crises have continued to emerge in recent years, contributing to severe economic contractions in Japan, Russia, and Southeast Asia. In response, international organizations have advocated enhanced market discipline, encouraging countries to improve disclosure. One reason so little progress has been made is that neither the proponents nor the opponents of enchanted disclosure policies have persuasive empirical evidence to support their views on potential costs and benefits of such a policy. This paper fills that gap by examining the impact of requiring the release of supervisory information on troubled U.S. banks during a severe banking crisis. We find that improving disclosure at troubled U.S. banks during the banking crisis was not destabilizing and did provide conditions for market discipline to work more effectively. These findings support the public policy proposal of enhanced bank disclosure, even at a time when experiencing a banking crisis.

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Paper provided by Federal Reserve Bank of Boston in its series Working Papers with number 99-1.

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Date of creation: 1999
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Handle: RePEc:fip:fedbwp:99-1

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Related research
Keywords: Bank supervision ; Public policy ; Transparency;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  4. Robert DeYoung & Mark J. Flannery & William W. Lang & Sorin M. Sorescu, 1998. "The informational advantage of specialized monitors: the case of bank examiners," Working Paper Series WP-98-4, Federal Reserve Bank of Chicago. [Downloadable!]
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    Other versions:
  7. Frederic S. Mishkin, 1992. "Anatomy of a Financial Crisis," NBER Working Papers 3934, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Steven Radelet & Jeffrey D. Sachs, 1998. "The East Asian Financial Crisis: Diagnosis, Remedies, Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1998-1), pages 1-90. [Downloadable!]
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  10. Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Spiegel, Mark M. & Yamori, Nobuyoshi, 2004. "Determinants of Voluntary Bank Disclosure: Evidence from Japanese Shinkin Banks," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. anonymous, 2000. "Improving public disclosure in banking," Staff Studies 173, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  3. Fred Furlong & Simon Kwan, 2006. "Safe and sound banking, 20 years later: what was proposed and what has been adopted," Working Paper Series 2006-27, Federal Reserve Bank of San Francisco. [Downloadable!]
  4. Frederick T. Furlong & Simon Kwan, 2006. "Safe & sound banking, 20 years later: what was proposed and what has been adopted," Proceedings, Federal Reserve Bank of San Francisco. [Downloadable!]
  5. Solomon Tadesse, 2005. "Banking Fragility and Disclosure: International Evidence," William Davidson Institute Working Papers Series wp748, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  6. R. Alton Gilbert & Mark D. Vaughan, 2000. "Do depositors care about enforcement actions?," Working Papers 2000-020, Federal Reserve Bank of St. Louis. [Downloadable!]
  7. Frederick T. Furlong & Robard Williams, 2006. "Financial market signals and banking supervision: are current practices consistent with research findings?," Economic Review, Federal Reserve Bank of San Francisco, pages 17-29. [Downloadable!]
  8. John S. Jordan, 1999. "Pricing bank stocks: the contribution of bank examinations," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 39-53. [Downloadable!]
  9. Mark Spiegel & Nobuyoshi Yamori, 2004. "Market price accounting and depositor discipline in Japanese regional banks," Pacific Basin Working Paper Series 2004-27, Federal Reserve Bank of San Francisco. [Downloadable!]
  10. Ari Hyytinen & Tuomas Takalo, 2002. "Enchancing Bank Transparency : A Re-assessment," Discussion Papers 828, The Research Institute of the Finnish Economy. [Downloadable!]
    Other versions:
  11. Ari Hyytinen & Tuomas Takalo, 2001. "Preventing Systemic Crises through Bank Transparency," Discussion Papers 776, The Research Institute of the Finnish Economy. [Downloadable!]
    Other versions:
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