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The Value of Opacity in a Banking Crisis

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Abstract

During moments of heightened economic uncertainty, authorities often need to decide on how much information to disclose. For example, during crisis periods, we often observe regulators limiting access to bank‑level information with the goal of restoring the public's confidence in banks. Thus, information management often plays a central role in ending financial crises. Despite the perceived importance of managing information about individual banks during a financial crisis, we are not aware of any empirical work that quantifies the effect of such policies. In this blog post, we highlight results from our recent working paper, demonstrating that in a crisis, a policy of suppressing information about banks' balance sheets has a significant and positive effect on deposits.

Suggested Citation

  • Haelim Anderson & Adam Copeland, 2020. "The Value of Opacity in a Banking Crisis," Liberty Street Economics 20200402, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:87703
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    Cited by:

    1. Jézabel Couppey-Soubeyran & Erica Perego & Fabien Tripier, 2020. "European Banks and the Covid-19 Crash Test," EconPol Policy Brief 30, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.

    More about this item

    Keywords

    Information management; Bank Opacity; Great Depression; Banking Crisis;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • N0 - Economic History - - General

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