Deposit Windfalls and Bank Reporting Quality: Evidence from Shale Booms

58 Pages Posted: 21 Mar 2018 Last revised: 27 Jul 2018

See all articles by Xi Wu

Xi Wu

Haas School of Business, University of California Berkeley

Date Written: July 16, 2017

Abstract

This paper investigates how depositor information problems affect bank reporting quality. Using plausibly exogenous deposit windfalls coming from shale and oil leases, I find that banks exposed to shale booms provide higher reporting quality, measured as loan loss provision timeliness, compared to other banks. Improved loan provisioning timeliness is concentrated in banks with stronger incentives to attract deposits–smaller banks and banks with fewer uninsured deposits. Moreover, banks that improve the most tend to experience a larger increase in their subsequent deposit levels, suggesting that depositors value timely information. Collectively, my results suggest that information asymmetry between depositors and banks is an important determinant of banks’ reporting incentives.

Keywords: Banks, Financial reporting, Loan loss provision, Shale booms, Deposit shocks

JEL Classification: G10, G21, G28, M41

Suggested Citation

Wu, Xi, Deposit Windfalls and Bank Reporting Quality: Evidence from Shale Booms (July 16, 2017). Paris December 2018 Finance Meeting EUROFIDAI - AFFI, Available at SSRN: https://ssrn.com/abstract=3141722 or http://dx.doi.org/10.2139/ssrn.3141722

Xi Wu (Contact Author)

Haas School of Business, University of California Berkeley ( email )

United States

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