Determinants of Operational Risk Reporting in the Banking Industry

35 Pages Posted: 28 Sep 2003

See all articles by Guenther Helbok

Guenther Helbok

Bank Austria Creditanstalt - Department of Operational and Group Risk Control

Christian Wagner

WU Vienna University of Economics and Business; Vienna Graduate School of Finance (VGSF)

Date Written: July 11, 2006

Abstract

Motivated by the recognition of operational risk management as being crucial for banks and the importance of adequate reporting for enhancing market discipline, the present paper investigates operational risk disclosure practices in the 1998 to 2001 period. Whereas reporting was not mandatory at that time, disclosure increased in both extent and content. Consistent with arguments based on corporate finance theory, empirical evidence indicates that financial institutions with a lower equity/assets ratio and/or profitability ratio give greater importance to disclosing their assessment and management of operational risks whereas those with higher ratios choose a lower disclosure stance.

Keywords: operational risk, banking, Basel II, discretionary disclosure, disclosure index, information risk, agency costs, political costs, random effects ordered logit model

JEL Classification: G28, M41, M45

Suggested Citation

Helbok, Guenther and Wagner, Christian, Determinants of Operational Risk Reporting in the Banking Industry (July 11, 2006). Available at SSRN: https://ssrn.com/abstract=425720 or http://dx.doi.org/10.2139/ssrn.425720

Guenther Helbok

Bank Austria Creditanstalt - Department of Operational and Group Risk Control ( email )

Julius Tandler Platz 3
Vienna 1011
Austria

Christian Wagner (Contact Author)

WU Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Vienna Graduate School of Finance (VGSF) ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

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