Real Effects of Banks’ Financial Reporting Frequency

53 Pages Posted: 9 Mar 2017  

Karthik Balakrishnan

London Business School

Aytekin Ertan

London Business School

Date Written: February 15, 2017

Abstract

We examine the real effects of financial reporting frequency on banks from 2000–2014. We find that quarterly financial reporting improves loan portfolio quality. European banks experience a relative decrease of about 11% in their nonperforming loans after switching to quarterly financial reporting. Consistent with market discipline enhancing lending practices, these results are stronger in regimes with weaker depositor insurance and external monitoring, and in those with stronger capital markets. We also find that banks with quarterly released financial information experience lower deposit interest rates and credit default swap spreads. Collectively, our findings suggest that quarterly reporting discipline banks by limiting excessive risk-taking.

Keywords: Financial Reporting Frequency, Banking, Regulation, Asset Quality, Lending

JEL Classification: G21, G28, G32, M41, M48

Suggested Citation

Balakrishnan, Karthik and Ertan, Aytekin, Real Effects of Banks’ Financial Reporting Frequency (February 15, 2017). Available at SSRN: https://ssrn.com/abstract=2928994 or http://dx.doi.org/10.2139/ssrn.2928994

Karthik Balakrishnan

London Business School ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom

Aytekin Ertan (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
442070008131 (Phone)

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