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Enhancing Bank Transparency: a Re-assessment

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Author Info

  • Hyytinen, A.
  • Takalo, T.

Abstract

Transparency regulation aims at reducing financial fragility by strengthening market discipline. There are however two elementary properties of banking that may render such regulation detrimental. First, an extensive financial safety net may eliminate the disciplinary effect of transparency regulation. Second, achieving transparency is costly for banks, as it dilutes their charter values and hence it also reduces their private costs of risk-taking. We consider both the direct costs of complying with disclosure requirements and the indirect transparency costs stemming from imperfect property rights governing information and specify the conditions under which transparency regulation can reduce financial fragility.

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Bibliographic Info

Paper provided by Department of Economics in its series University of Helsinki, Department of Economics with number 492.

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Length: 37 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:fth:helsec:492

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Postal: University of Helsinki; Department of Economics, P.O.Box 54 (Unioninkatu 37) FIN-00014 Helsingin Yliopisto
Phone: +358 9 191 8897
Fax: +358 9 191 8877
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Web page: http://www.helsinki.fi/politiikkajatalous/
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Keywords: INFORMATION ; BANKS ; INSURANCE;

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References

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  1. Berlin, Mitchell & Saunders, Anthony & Udell, Gregory F., 1991. "Deposit insurance reform: What are the issues and what needs to be fixed?," Journal of Banking & Finance, Elsevier, vol. 15(4-5), pages 735-752, September.
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Citations

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Cited by:
  1. Arnaud Bourgain & Patrice Pieretti & Skerdilajda Zanaj, 2009. "International Financial competition and bank risk-taking in emerging economies," CREA Discussion Paper Series 09-08, Center for Research in Economic Analysis, University of Luxembourg.
  2. Brack, Estelle & Saidane, Dhafer, 2010. "Qu’attend-on de la finance mondiale après la crise ? Les quatre commandements oubliés
    [What do we expect form global finance after the crisis? The four forgotten Commandments]
    ," MPRA Paper 23472, University Library of Munich, Germany.
  3. Juha-Pekka Niinimäki, 2003. "Fairly Priced Deposit Insurance under Adverse Selection," Finnish Economic Papers, Finnish Economic Association, vol. 16(1), pages 38-48, Spring.
  4. Nicole Allenspach, 2009. "Banking and Transparency: Is More Information Always Better?," Working Papers 2009-11, Swiss National Bank.
  5. Reint Gropp & Hendrik Hakenes & Isabel Schnabel, 2011. "Competition, Risk-shifting, and Public Bail-out Policies," Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 2084-2120.
  6. Korkeamäki, Timo & Rainio, Elina & Takalo, Tuomas, 2010. "Law and stock markets: evidence from an emerging market," Research Discussion Papers 1/2010, Bank of Finland.
  7. Hyytinen, Ari & Pajarinen, Mika, 2003. "External Finance, Firm Growth and the Benefits of Information Disclosure: Evidence from Finland (Revised)," Discussion Papers 805, The Research Institute of the Finnish Economy.
  8. Jukka Vauhkonen, 2012. "The Impact of Pillar 3 Disclosure Requirements on Bank Safety," Journal of Financial Services Research, Springer, vol. 41(1), pages 37-49, April.
  9. Delis, Manthos D & Staikouras, Panagiotis, 2009. "On-site audits, sanctions, and bank risk-taking: An empirical overture towards a novel regulatory and supervisory philosophy," MPRA Paper 16836, University Library of Munich, Germany.
  10. Moreno, Diego & Takalo , Tuomas, 2012. "Optimal bank transparency," Research Discussion Papers 9/2012, Bank of Finland.
  11. Chen, Yehning & Hasan, Iftekhar, 2005. "The transparency of the banking industry and the efficiency of information-based bank runs," Research Discussion Papers 24/2005, Bank of Finland.
  12. Hyytinen, Ari & Takalo, Tuomas, 2003. "Preventing systemic crises through bank transparency," Research Discussion Papers 25/2003, Bank of Finland.
  13. Bhide, M G & Prasad, A & Ghosh, Saibal, 2001. "Emerging Challenges in Indian Banking," MPRA Paper 1711, University Library of Munich, Germany.
  14. Ari Hyytinen & Mika Pajarinen, 2005. "External Finance, Firm Growth and the Benefits of Information Disclosure: Evidence from Finland," European Journal of Law and Economics, Springer, vol. 19(1), pages 69-93, January.

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