Is Accounting Enforcement Related to Risk-Taking in the Banking Industry?

Posted: 20 Jul 2020 Last revised: 10 Aug 2020

See all articles by Lorenzo Dal Maso

Lorenzo Dal Maso

affiliation not provided to SSRN

Kiridaran (Giri) Kanagaretnam

York University - Schulich School of Business

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business

Francesco Mazzi

University of Florence - Department of Business Economics

Date Written: June 1, 2020

Abstract

Using a sample of banks from 36 countries, we document that accounting enforcement is negatively related to bank risk-taking. We also provide evidence that accounting enforcement enhances bank stability during the crisis. In addition, we show that banks assume less risk through more conservative lending decisions and a reduction in complexity in jurisdictions with higher accounting enforcement. Our results show that formal institutions such as accounting enforcement are associated with bank financial decisions and risk-taking behavior.

Keywords: Accounting Enforcement, Bank Risk-taking, Bank Complexity, Bank Reporting Discretion.

JEL Classification: G21, G28, M41

Suggested Citation

Dal Maso, Lorenzo and Kanagaretnam, Kiridaran and Lobo, Gerald J. and Mazzi, Francesco, Is Accounting Enforcement Related to Risk-Taking in the Banking Industry? (June 1, 2020). Journal of Financial Stability, Vol. 49, August 2020, Available at SSRN: https://ssrn.com/abstract=3636243

Lorenzo Dal Maso (Contact Author)

affiliation not provided to SSRN

Kiridaran Kanagaretnam

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States
713-743-4838 (Phone)
713-743-4828 (Fax)

HOME PAGE: http://www.bauer.uh.edu/acct/acctprofile.asp?search=Gerald%20Lobo

Francesco Mazzi

University of Florence - Department of Business Economics ( email )

Via delle Pandette 9
Florence, Florence 50132
Italy
0039 055 4374684 (Phone)
0039 055 4374910 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
313
PlumX Metrics