Financial Transparency and Sources of Hidden Capital in Turkish Banks
31 Pages Posted: 18 Apr 2009 Last revised: 25 Feb 2011
Date Written: April 17, 2009
This paper investigates how changes in regulatory and economic environments affect the transparency of banks' financial-statements. Reregulation and a volatile economy make Turkish banks the ideal sample. I disaggregate sources of both hidden and booked capital in Turkish banks traded on the Istanbul Stock Exchange between 1988 and 2006. Hidden capital account for the difference between the accounting and opportunity-cost measures of a firm's net worth. Hidden capital increases in crisis periods which indicate a greater reliance on government-contributed safety-net capital. The increase in hidden capital is more pronounced for large banks. Too-Big-To-Fail policies may explain why large banks are the beneficiaries of government-contributed capital.
Keywords: Transparency, financial safety net, Turkish financial crisis
JEL Classification: G21, G28, G15
Suggested Citation: Suggested Citation