Bank Asset and Informational Quality
30 Pages Posted: 5 Feb 2020 Last revised: 25 Feb 2020
Date Written: January 13, 2020
We examine the relationship between bank asset and informational quality. We use a diversified panel of 699 banks from 84 countries and measure opacity (lack of informational quality) with rating disagreements between issuer-specific ratings by three credit rating agencies (S&P, Moody’s and Fitch). Results from panel ordered logit regressions show that poor asset quality increases the probability of greater credit rating disagreements. Considering that the recent regulatory frameworks require from banks to reduce the worrying levels of non-performing loans and to increase transparency in their risk-taking, our findings have important policy implications.
Keywords: banks, opacity, split ratings, asset quality
JEL Classification: G20, G21, G28
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