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Enchancing Bank Transparency : A Re-assessment

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  • Hyytinen, Ari
  • Takalo, Tuomas

Abstract

Transparency regulation aims at reducing financial fragility by strengthening market discipline.There are however two elementary properties of banking that may render such regulation inefficient at best and detrimental at worst.First, an extensive financial safety net may eliminate the disciplinary effect of transparency regulation.Second, achieving transparency is costly for banks, as it dilutes their charter values, and hence it also reduces their private costs of risk-taking.We consider both the direct costs of complying with disclosure requirements and the indirect transparency costs stemming from imperfect property rights governing information and specify the conditions under which transparency regulation can (and cannot) reduce financial fragility. Key words: information disclosure, market discpline, bank transparency, deposit insurance, financial safety net
(This abstract was borrowed from another version of this item.)

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  • Hyytinen, Ari & Takalo, Tuomas, 2002. "Enchancing Bank Transparency : A Re-assessment," Discussion Papers 828, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:dpaper:828
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    More about this item

    Keywords

    information disclosure; market discpline; bank transparency; deposit insurance; financial safety net
    (this abstract was borrowed from another version of this item.)
    ;
    All these keywords.

    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

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