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Does bank transparency benefit from the Volcker Rule?

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  • Yuehua Li
  • Zhentao Liu
  • Sha Pei

Abstract

The Volcker Rule intends to limit bank risk taking by prohibiting or restricting proprietary trading. We find that discretionary loan loss provision significantly increases for affected banks. Affected banks are also less timely in their loan loss recognition. Our findings suggest the Volcker Rule has unintended consequence on bank transparency. This is consistent with the current concern that the Volcker Rule increases bank risk and reduces the effectiveness of risk management.

Suggested Citation

  • Yuehua Li & Zhentao Liu & Sha Pei, 2020. "Does bank transparency benefit from the Volcker Rule?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(2), pages 1471-1500, June.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:2:p:1471-1500
    DOI: 10.1111/acfi.12476
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