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| Author: | Hyttinen, A. Takalo, T. |
| Title: | Enhancing bank transparency: a re-assessment |
| Journal: | European Finance Review
2002 : VOL. 6:3, p. 429-445 |
| Index terms: | Banking Disclosure |
| Freeterms: | Market discipline |
| Language: | eng |
| Abstract: | The aim of tranparency regulation is at reducing financial fragility by strengthening market discipline. Two elementary properties of banking may, however, render such regulation inefficient at best and detrimental at worst. First, an extensive financial safety net may eliminate the disciplinary effect of transparency regulation. Second, achieving transparency is costly for banks, as it dilutes their charter values, and hence also reduces their private costs of risk-taking. Both the direct costs of complying with disclosure requirements and the indirect transparency costs stemming from imperfect property rights governing information are considered and particularly the conditions under which transparency regulation cannot reduce financial fragility are infered. |
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