IDEAS home Printed from https://ideas.repec.org/p/rif/dpaper/776.html
   My bibliography  Save this paper

Preventing Systemic Crises through Bank Transparency

Author

Listed:
  • Hyytinen, Ari
  • Takalo, Tuomas

Abstract

The banking system is known to be vulnerable to self-fulfilling crises that are caused by depositors coordination failure.We show that transparency regulation may prevent certain types of systemic crises by eliminating the possibility of the coordination failure. Key words: bank transparency, financial stability, disclosure regulation JEL classification numbers: G21, G28
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Hyytinen, Ari & Takalo, Tuomas, 2001. "Preventing Systemic Crises through Bank Transparency," Discussion Papers 776, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:dpaper:776
    as

    Download full text from publisher

    File URL: http://www.etla.fi/wp-content/uploads/2012/09/dp776.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Niinimaki, J. -P., 2001. "Intertemporal diversification in financial intermediation," Journal of Banking & Finance, Elsevier, vol. 25(5), pages 965-991, May.
    2. Craine, Roger, 1995. " Fairly Priced Deposit Insurance and Bank Charter Policy," Journal of Finance, American Finance Association, vol. 50(5), pages 1735-1746, December.
    3. Stole, Lars A, 1995. "Nonlinear Pricing and Oligopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(4), pages 529-562, Winter.
    4. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    5. Poon, Winnie P. H. & Firth, Michael & Fung, Hung-Gay, 1999. "A multivariate analysis of the determinants of Moody's bank financial strength ratings," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 9(3), pages 267-283, August.
    6. Ari Hyytinen & Tuomas Takalo, 2002. "Enhancing Bank Transparency: A Re-assessment," Review of Finance, European Finance Association, vol. 6(3), pages 429-445.
    7. Eric S. Rosengren, 1998. "Will greater disclosure and transparency prevent the next banking crisis?," Working Papers 98-8, Federal Reserve Bank of Boston.
    8. Ari Hyytinen, 2002. "The time profile of risk in banking crises: evidence from Scandinavian banking sectors," Applied Financial Economics, Taylor & Francis Journals, vol. 12(9), pages 613-623.
    9. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
    10. Chiappori, Pierre-Andre & Perez-Castrillo, David & Verdier, Thierry, 1995. "Spatial competition in the banking system: Localization, cross subsidies and the regulation of deposit rates," European Economic Review, Elsevier, vol. 39(5), pages 889-918, May.
    11. Giannetti, Mariassunta, 2003. " Bank-Firm Relationships and Contagious Banking Crises," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(2), pages 239-261, April.
    12. Bhattacharya, Sudipto & Boot, Arnoud W A & Thakor, Anjan V, 1998. "The Economics of Bank Regulation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(4), pages 745-770, November.
    13. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    14. Bank for International Settlements, 2003. "Credit risk transfer," CGFS Papers, Bank for International Settlements, number 20.
    15. Park, Sangkyun, 1995. "Market discipline by depositors: Evidence from reduced-form equations," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(35), pages 497-514.
    16. Matutes, Carmen & Vives, Xavier, 2000. "Imperfect competition, risk taking, and regulation in banking," European Economic Review, Elsevier, vol. 44(1), pages 1-34, January.
    17. Boot, Arnoud W. A. & Schmeits, Anjolein, 2000. "Market Discipline and Incentive Problems in Conglomerate Firms with Applications to Banking," Journal of Financial Intermediation, Elsevier, vol. 9(3), pages 240-273, July.
    18. Billett, Matthew T. & Garfinkel, Jon A. & O'Neal, Edward S., 1998. "The cost of market versus regulatory discipline in banking," Journal of Financial Economics, Elsevier, vol. 48(3), pages 333-358, June.
    19. Santos, Joao A. C., 1999. "Bank capital and equity investment regulations," Journal of Banking & Finance, Elsevier, vol. 23(7), pages 1095-1120, July.
    20. Rochet, Jean-Charles & Tirole, Jean, 1996. "Interbank Lending and Systemic Risk," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 733-762, November.
    21. Tito Cordella & Eduardo Levy Yeyati, 1998. "Public Disclosure and Bank Failures," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 110-131, March.
    22. Yehning Chen, 1999. "Banking Panics: The Role of the First-Come, First-Served Rule and Information Externalities," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 946-968, October.
    23. J. Miguel Villas-Boas & Udo Schmidt-Mohr, 1999. "Oligopoly with Asymmetric Information: Differentiation in Credit Markets," RAND Journal of Economics, The RAND Corporation, vol. 30(3), pages 375-396, Autumn.
    24. V.V. Chari & Ravi Jagannathan, 1984. "Banking Panics," Discussion Papers 618, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    25. Herring, Richard J & Vankudre, Prashant, 1987. " Growth Opportunities and Risk-Taking by Financial Intermediaries," Journal of Finance, American Finance Association, vol. 42(3), pages 583-599, July.
    26. Herring, Richard J, 1999. "Credit Risk and Financial Instability," Oxford Review of Economic Policy, Oxford University Press, vol. 15(3), pages 63-79, Autumn.
    27. Mathias Dewatripont & Jean Tirole, 1994. "The prudential regulation of banks," ULB Institutional Repository 2013/9539, ULB -- Universite Libre de Bruxelles.
    28. Julapa Jagtiani & Catharine Lemieux, 1999. "Stumbling blocks to increasing market discipline in the banking sector: a note on bond pricing and funding strategy prior to failure," Emerging Issues, Federal Reserve Bank of Chicago, issue Sep.
    29. Craine, Roger, 1995. "Fairly Priced Deposit Insurance and Bank Charter Policy," Department of Economics, Working Paper Series qt6dv142sd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    30. Chan, Yuk-Shee & Greenbaum, Stuart I & Thakor, Anjan V, 1992. " Is Fairly Priced Deposit Insurance Possible?," Journal of Finance, American Finance Association, vol. 47(1), pages 227-245, March.
    31. Park, Sangkyun & Peristiani, Stavros, 1998. "Market Discipline by Thrift Depositors," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(3), pages 347-364, August.
    32. Stephen D. Williamson, 1986. "Increasing Returns to Scale in Financial Intermediation and the Non-Neutrality of Government Policy," Review of Economic Studies, Oxford University Press, vol. 53(5), pages 863-875.
    33. Franklin R. Edwards & Frederic S. Mishkin, 1995. "The decline of traditional banking: implications for financial stability and regulatory policy," Economic Policy Review, Federal Reserve Bank of New York, issue Jul, pages 27-45.
    34. Demirguc-Kunt, Asli & Detragiache, Enrica, 1997. "The determinants of banking crises : evidence from industrial and developing countries," Policy Research Working Paper Series 1828, The World Bank.
    35. Berlin, Mitchell & Saunders, Anthony & Udell, Gregory F., 1991. "Deposit insurance reform: What are the issues and what needs to be fixed?," Journal of Banking & Finance, Elsevier, vol. 15(4-5), pages 735-752, September.
    36. Stephen Morris & Hyun Song Shin, 2002. "Social Value of Public Information," American Economic Review, American Economic Association, vol. 92(5), pages 1521-1534, December.
    37. Calomiris, Charles W & Kahn, Charles M, 1991. "The Role of Demandable Debt in Structuring Optimal Banking Arrangements," American Economic Review, American Economic Association, vol. 81(3), pages 497-513, June.
    38. Besanko, David & Thakor, Anjan V., 1992. "Banking deregulation: Allocational consequences of relaxing entry barriers," Journal of Banking & Finance, Elsevier, vol. 16(5), pages 909-932, September.
    39. Jordan, John S. & Peek, Joe & Rosengren, Eric S., 2000. "The Market Reaction to the Disclosure of Supervisory Actions: Implications for Bank Transparency," Journal of Financial Intermediation, Elsevier, vol. 9(3), pages 298-319, July.
    40. Mayes, David & Vesala, Jukka, 1998. "On the problems of the home country control," Research Discussion Papers 20/1998, Bank of Finland.
    41. Lawrence H. Summers, 2000. "International Financial Crises: Causes, Prevention, and Cures," American Economic Review, American Economic Association, pages 1-16.
    42. John S. Jordan & Joe Peek & Eric S. Rosengren, 1999. "Impact of greater bank disclosure amidst a banking crisis," Working Papers 99-1, Federal Reserve Bank of Boston.
    43. Donald P. Morgan, 1999. "Whether and why banks are opaque," Proceedings 636, Federal Reserve Bank of Chicago.
    44. Matutes, Carmen & Vives, Xavier, 1996. "Competition for Deposits, Fragility, and Insurance," Journal of Financial Intermediation, Elsevier, vol. 5(2), pages 184-216, April.
    45. Donald P. Morgan, 2002. "Rating Banks: Risk and Uncertainty in an Opaque Industry," American Economic Review, American Economic Association, vol. 92(4), pages 874-888, September.
    46. Asli Demirgüç-Kunt & Enrica Detragiache, 1998. "The Determinants of Banking Crises in Developing and Developed Countries," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 81-109, March.
    47. Roger Craine., 1995. "Fairly Priced Deposit Insurance and Bank Charter Policy," Economics Working Papers 95-234, University of California at Berkeley.
    48. Morris, Stephen & Shin, Hyun Song, 1999. "Risk Management with Interdependent Choice," Oxford Review of Economic Policy, Oxford University Press, vol. 15(3), pages 52-62, Autumn.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kauko, Karlo, 2007. "Interlinking securities settlement systems: A strategic commitment?," Journal of Banking & Finance, Elsevier, vol. 31(10), pages 2962-2977, October.
    2. Andrievskaya, Irina & Semenova, Maria, 2016. "Does banking system transparency enhance bank competition? Cross-country evidence," Journal of Financial Stability, Elsevier, vol. 23(C), pages 33-50.
    3. J-P. Niinimaki, 2011. "Optimal Design of Bank Bailouts: Prompt Corrective Action," Discussion Papers 69, Aboa Centre for Economics.
    4. Nicole Allenspach, 2009. "Banking and Transparency: Is More Information Always Better?," Working Papers 2009-11, Swiss National Bank.
    5. Vauhkonen, Jukka, 2003. "Are adverse selection models of debt robust to changes in market structure?," Research Discussion Papers 28/2003, Bank of Finland.
    6. Nier, Erlend W., 2005. "Bank stability and transparency," Journal of Financial Stability, Elsevier, vol. 1(3), pages 342-354, April.
    7. J.-P. Niinimäki, 2012. "Optimal Design of Bank Bailouts: The Case of Prompt Corrective Action," Finnish Economic Papers, Finnish Economic Association, vol. 25(1), pages 1-19, Spring.
    8. Faidon Kalfaoglou & Alexandros Sarris, 2006. "Modeling the Components of Market Discipline," Working Papers 36, Bank of Greece.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rif:dpaper:776. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kaija Hyvönen-Rajecki). General contact details of provider: http://edirc.repec.org/data/etlaafi.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.