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Public Disclosure and Bank Failures

25 Pages Posted: 15 Feb 2006  

Tito Cordella

World Bank

Eduardo Levy Levy-Yeyati

Universidad Torcuato Di Tella - School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: August 1997

Abstract

This paper examines how public disclosure of banks` risk exposure affects banks` risk-taking incentives and assesses how the presence of informed depositors influences the soundness of the banking system. It finds that, when banks have complete control over the volatility of their loan portfolios, public disclosure reduces the probability of banking crises. However, when banks do not control their risk exposure, the presence of informed depositors may increase the probability of bank failures.

JEL Classification: D82, G14, G21, G28

Suggested Citation

Cordella, Tito and Levy-Yeyati, Eduardo Levy, Public Disclosure and Bank Failures (August 1997). IMF Working Paper, Vol. , pp. 1-25, 1997. Available at SSRN: https://ssrn.com/abstract=882611

Tito Cordella (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
202-473-0043 (Phone)

Eduardo Levy Levy-Yeyati

Universidad Torcuato Di Tella - School of Business ( email )

Saenz Valiente 1010
C1428BIJ Buenos Aires
Argentina

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