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The Impact Of Reserves Practices On Bank Opacity

Author

Listed:
  • GIULIANO IANNOTTA

    (Universita Cattolica del Sacro Cuore, Italy)

  • SIMON H. KWAN

    (��Federal Reserve Bank of San Francisco, USA)

Abstract

This paper finds that banking firms’ unexpected loan loss provisions had a significant effect of increasing bank opacity, both before and during the 2007–2009 financial crisis. Furthermore, during the financial crisis, the extent to which banks delayed loan loss recognition is found to have had a significant effect on bank opacity, confirming an important concern raised by the Financial Crisis Advisory Group. Overall, banks’ practices in managing reserves seem to have a material impact on their opacity.

Suggested Citation

  • Giuliano Iannotta & Simon H. Kwan, 2022. "The Impact Of Reserves Practices On Bank Opacity," Journal of Financial Management, Markets and Institutions (JFMMI), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 1-26, June.
    • Handle: RePEc:wsi:jfmmix:v:10:y:2022:i:01:n:s2282717x22500025
    DOI: 10.1142/S2282717X22500025
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    More about this item

    Keywords

    Bank opacity; loan loss reserve; delays in loss recognition;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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