53 Pages Posted: 9 Mar 2017
Date Written: February 15, 2017
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: 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