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Bank transparency and liquidity hoarding

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  • Leng, Dong
  • Sun, Ning
  • Wei, Xu
  • Xia, Cong

Abstract

This paper examines the impact of bank transparency on liquidity hoarding. By leveraging a quasi-natural experiment derived from publicly disclosed information of listed commercial banks, we employ a staggered DID model to investigate the impact of bank transparency on liquidity hoarding and its transmission channels. We find that bank information disclosure significantly reduces liquidity hoarding. This is mainly because disclosure enhances public trust in banks, thereby lowering banks’ interest expense on customer deposits. At the same time, banks increase the issuance of corporate loans and mortgages, and reduce holdings of trading financial assets. The inhibitory effect of information disclosure on liquidity hoarding is more pronounced in the following three types of banks: high-risk banks, banks holding high liquidity assets, and banks located in provinces with stronger financial regulatory intensity.

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  • Leng, Dong & Sun, Ning & Wei, Xu & Xia, Cong, 2025. "Bank transparency and liquidity hoarding," Economics Letters, Elsevier, vol. 254(C).
    • Handle: RePEc:eee:ecolet:v:254:y:2025:i:c:s0165176525002563
    DOI: 10.1016/j.econlet.2025.112419
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