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Improving public disclosure in banking

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  • anonymous

Abstract

The use of market discipline as a complement to bank supervision and regulation has gained greater acceptance in the United States and abroad. It is also widely recognized that effective market discipline depends on market participants' having information about the risks and financial condition of banking organizations. Therefore, attention is being focused increasingly on ways to improve transparency in banking. Staff of the Federal Reserve System undertook a staff study, Improving Public Disclosure in Banking, to consider initiatives that promote better disclosure in banking. The purpose of the study is to present a set of initiatives that would reinforce the current process shaping disclosure while avoiding additional regulatory requirements. The study lays the foundation for the initiatives by considering how market discipline could supplement supervision in principle and by reviewing the empirical evidence on market oversight and discipline in banking. Key sections of the study discuss the factors shaping public disclosure in banking and identify the strengths and weaknesses of the process. Regarding the potential for market discipline, the study suggests that greater reliance on private-sector oversight in banking can be consistent with the supervisory goals of limiting moral hazard and systemic risk and that the oversight can be effective.

Suggested Citation

  • anonymous, 2000. "Improving public disclosure in banking," Staff Studies 173, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgss:173
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    File URL: http://www.federalreserve.gov/pubs/staffstudies/173/default.htm
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    File URL: http://www.federalreserve.gov/pubs/staffstudies/173/ss173.pdf
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    References listed on IDEAS

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    1. Ellis, David M. & Flannery, Mark J., 1992. "Does the debt market assess large banks, risk? : Time series evidence from money center CDs," Journal of Monetary Economics, Elsevier, vol. 30(3), pages 481-502, December.
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    9. Tito Cordella & Eduardo Levy Yeyati, 1998. "Public Disclosure and Bank Failures," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 110-131, March.
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    13. Frederick T. Furlong & Michael C. Keeley, 1987. "Subordinated debt as bank capital," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct23.
    14. anonymous, 1999. "Using subordinated debt as an instrument of market discipline," Staff Studies 172, Board of Governors of the Federal Reserve System (U.S.).
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    1. repec:wsi:ijmpcx:v:20:y:2009:i:08:n:s012918310901431x is not listed on IDEAS
    2. repec:wsi:ijmpcx:v:18:y:2007:i:09:n:s0129183107011492 is not listed on IDEAS
    3. repec:wsi:apjorx:v:26:y:2009:i:01:n:s0217595909002146 is not listed on IDEAS
    4. repec:wsi:jecxxx:v:16:y:2008:i:02:n:s0218495808000077 is not listed on IDEAS

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    Keywords

    Banks and banking ; Bank supervision;

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