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Risk Reporting and Bank Runs


  • Susanne Homölle


Increasing risk disclosure of banks, e.g., via risk reporting in their annual accounts, is high on the agenda. In this paper, I analyze whether risk reporting of banks shows only favorable effects, as regulatory authorities suppose, or whether there are also undesired effects. Following other studies on deposit contracts and bank runs, I concentrate on the impact on depositors’ withdrawal decisions and banks’ insolvency risk. My analysis shows mixed results: risk reporting does not generally lead to a decrease in banks’ risk exposure and the probability of bank runs, respectively. Instead, it induces higher insolvency risk under certain conditions, which I identify, and may even lower welfare.

Suggested Citation

  • Susanne Homölle, 2009. "Risk Reporting and Bank Runs," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 61(1), pages 2-39, January.
  • Handle: RePEc:sbr:abstra:v:61:y:2009:i:1:p:2-39

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    More about this item


    Bank Run; Insolvency Risk; Risk Reporting;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting


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