The Effects of the Financial Crisis and Basel III on Banks’ Risk Disclosure: A Textual Analysis

19 Pages Posted: 11 Sep 2022

See all articles by Avinoam Blum

Avinoam Blum

Bar Ilan University

Alon Raviv

Bar-Ilan University - Graduate School of Business Administration

Date Written: August 26, 2022

Abstract

We study the effects of the 2008 crisis and Basel III guidelines on the content of the  financial reports of Israeli banks, which are highly regulated and follow the Basel  guidelines. Our findings, based on LDA topic modeling and term frequency, indicate that already at the time of the crisis Israeli banks had shifted the focus of their reports from market and operational risks to credit and liquidity risks. The introduction of Basel III amplified this trend, such that the reports focused on the new regulations of leverage and liquidity coverage ratios, while neglecting market risk and VaR methods.

Keywords: Topic modeling, LDA, Financial crisis, Basel III, Banks, Financial Reports

Suggested Citation

Blum, Avinoam and Raviv, Alon, The Effects of the Financial Crisis and Basel III on Banks’ Risk Disclosure: A Textual Analysis (August 26, 2022). Available at SSRN: https://ssrn.com/abstract=4200644

Avinoam Blum

Bar Ilan University ( email )

Israel

Alon Raviv (Contact Author)

Bar-Ilan University - Graduate School of Business Administration ( email )

The Graduate School of Business Administration
Ana and Max Web st
Ramat Gan
Israel

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