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Post-crisis bank liquidity risk management disclosure

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  • Simplice A., Asongu

Abstract

Purpose – This work seeks to investigate what post crisis principles, banks have taken in a bid to manage liquidity risk. Its basis is founded on the ground that, the financial liquidity market was greatly affected during the recent economic turmoil and financial meltdown; when liquidity management disclosure was imperative for confidence building in depositors and shareholders. Design/methodology/approach – The study investigates Basel II pillar 3 disclosures on liquidity risk management in 20 of the top 33 world banks. Bank selection is based on available information, geographical balance and language permissibility. Information is searched from the World Wide Web; with a minimum of one hour allocated for ‘content search’; notwithstanding time spell for ‘content analysis’. When information on liquidity risk management is found, content scrutiny is guided by 16 disclosure principles; clubbed in four categories. Findings – Just 25% of sampled banks provide explicitly public accessible liquidity risk management information. This is a stark indication that, even in the post-crisis era, many top ranking banks do not still take seriously Basel disclosure norms; especially the February 2008 pre-crisis warning of the Basel Committee on Banking Supervision. Implications/limitations – Stakeholders of banks should easily have access to information on liquidity risk management. Banks falling short of this might not breed confidence in customers and shareholders in event of financial panic and turmoil. Like in the run-up to the previous financial crisis, if banks are not compelled to explicitly and expressly disclose what measures they adopt in a bid to guarantee stakeholder liquidity ; the onset of any financial shake-up would only precipitate a meltdown. The main limitation of this study is; the World Wide Web is used as the only source of information for bank stakeholders. Originality/value – The contribution of this paper to literature can be viewed from the role it plays in investigating what post-crisis measures banks have taken to inform stakeholders on how they manage liquidity risk. Paper type: Qualitative finance research paper.

Suggested Citation

  • Simplice A., Asongu, 2010. "Post-crisis bank liquidity risk management disclosure," MPRA Paper 27266, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:27266
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    References listed on IDEAS

    as
    1. Boot, Arnoud W A & Thakor, Anjan V, 2001. "The Many Faces of Information Disclosure," Review of Financial Studies, Society for Financial Studies, vol. 14(4), pages 1021-1057.
    2. Demirgüç-Kunt, AslI & Detragiache, Enrica & Tressel, Thierry, 2008. "Banking on the principles: Compliance with Basel Core Principles and bank soundness," Journal of Financial Intermediation, Elsevier, vol. 17(4), pages 511-542, October.
    3. Detragiache, Enrica & Gupta, Poonam, 2006. "Foreign banks in emerging market crises: Evidence from Malaysia," Journal of Financial Stability, Elsevier, vol. 2(3), pages 217-242, October.
    4. Admati, Anat R & Pfleiderer, Paul, 2000. "Forcing Firms to Talk: Financial Disclosure Regulation and Externalities," Review of Financial Studies, Society for Financial Studies, vol. 13(3), pages 479-519.
    5. Merrouche, Ouarda & Schanz, Jochen, 2010. "Banks' intraday liquidity management during operational outages: Theory and evidence from the UK payment system," Journal of Banking & Finance, Elsevier, vol. 34(2), pages 314-323, February.
    6. Tito Cordella & Eduardo Levy Yeyati, 1998. "Public Disclosure and Bank Failures," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 110-131, March.
    7. Qian, Yiming & John, Kose & John, Teresa A., 2004. "Financial system design and liquidity provision by banks and markets in a dynamic economy," Journal of International Money and Finance, Elsevier, vol. 23(3), pages 385-403, April.
    8. Dinger, Valeriya, 2009. "Do foreign-owned banks affect banking system liquidity risk?," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 647-657, December.
    9. Chen, Yehning & Hasan, Iftekhar, 2006. "The transparency of the banking system and the efficiency of information-based bank runs," Journal of Financial Intermediation, Elsevier, vol. 15(3), pages 307-331, July.
    10. Ratnovski, Lev, 2009. "Bank liquidity regulation and the lender of last resort," Journal of Financial Intermediation, Elsevier, vol. 18(4), pages 541-558, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Post crisis; Liquidity risk management; Bank;

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G00 - Financial Economics - - General - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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