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Banks’ disclosure and financial stability (110KB)

Author

Listed:
  • Rhiannon Sowerbutts

    (Bank of England)

  • Peter Zimmerman

    (Bank of England)

  • Ilknur Zer

    (Board of Governors of the Federal Reserve System)

Abstract

Inadequate public disclosure by banks contributed to the financial crisis. This is because investors, unable to judge the risks that banks are bearing, withdraw lending in times of systemic stress. This article presents quantitative indices which allow for the comparison of disclosure between banks and over time. Internationally, disclosure has improved since 2000, particularly around banks’ valuation methods and funding risk. However, more information alone is not sufficient to solve the problem. More needs to be done to ensure that the information provided is useful to investors, and that investors are incentivised to use this information. The ongoing reform agenda aims to address this.

Suggested Citation

  • Rhiannon Sowerbutts & Peter Zimmerman & Ilknur Zer, 2013. "Banks’ disclosure and financial stability (110KB)," Bank of England Quarterly Bulletin, Bank of England, vol. 53(4), pages 326-335.
    • Handle: RePEc:boe:qbullt:0120
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    File URL: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2013/banks-disclosure-and-financial-stability.pdf?la=en&hash=922EBD3F073B21BC5160205841097EB3449C664A
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    References listed on IDEAS

    as
    1. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    2. Joseph Noss & Rhiannon Sowerbutts, 2012. "Financial Stability Paper No 15: The implicit subsidy of banks," Bank of England Financial Stability Papers 15, Bank of England.
    3. Paul Tucker & Simon Hall & Aashish Pattani, 2013. "Macroprudential policy at the Bank of England," Bank of England Quarterly Bulletin, Bank of England, vol. 53(3), pages 192-200.
    4. Stephen Morris & Hyun Song Shin, 2002. "Social Value of Public Information," American Economic Review, American Economic Association, vol. 92(5), pages 1521-1534, December.
    5. repec:bla:jfinan:v:59:y:2004:i:4:p:1553-1583 is not listed on IDEAS
    6. William Dudley, 2009. "Lessons learned from the financial crisis," Speech 4, Federal Reserve Bank of New York.
    7. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Sandra Batten, & Rhiannon Sowerbutts & Misa Tanaka, 2016. "Let’s talk about the weather: the impact of climate change on central banks," Bank of England working papers 603, Bank of England.
    2. Daniel Quigley & Ansgar Walther, 2024. "Inside and Outside Information," Journal of Finance, American Finance Association, vol. 79(4), pages 2667-2714, August.
    3. Emily Beau & John Hill & Tanveer Hussain & Dan Nixon, 2014. "Bank funding costs: what are they, what determines them and why do they matter?," Bank of England Quarterly Bulletin, Bank of England, vol. 54(4), pages 370-384.
    4. Yener Altunbaş & Salvatore Polizzi & Enzo Scannella & John Thornton, 2022. "European Banking Union and bank risk disclosure: the effects of the Single Supervisory Mechanism," Review of Quantitative Finance and Accounting, Springer, vol. 58(2), pages 649-683, February.
    5. Richard Button & Samual Knott & Conor Macmanus & Matthew Willison, 2015. "Desperate adventurers and men of straw: the failure of City of Glasgow Bank and its enduring impact on the UK banking system," Bank of England Quarterly Bulletin, Bank of England, vol. 55(1), pages 23-35.

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