Recent Research on Banks’ Financial Reporting and Financial Stability

Stephen G. Ryan ()
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Stephen G. Ryan: Stern School of Business, New York University, New York, NY 10012, USA

Annual Review of Financial Economics, 2018, vol. 10, issue 1, 101-123

Abstract: Banks’ financial reporting requirements and discretionary choices may affect financial stability by altering one or more of the likelihood that banks violate regulatory capital requirements, banks’ internal discipline over risk management and financial reporting, and external market and regulatory discipline over banks. In this article, I discuss five recent empirical papers that examine these channels linking banks’ financial reporting to financial stability. I explain how these papers identify economic contexts and associated financial reporting constructs that enable powerful examinations of these channels, and how they employ research designs that meaningfully address the issues regarding valid causal inference raised by Acharya & Ryan (2016) . I conclude that, while each study examines a specific channel or two in a specific setting, collectively the literature is making steady progress in enhancing our understanding of the causal forces at play in the channels linking banks’ financial reporting and financial stability, the goal set forth by Acharya & Ryan (2016) . I also identify open questions that these papers suggest for future research on the effects of banks’ financial reporting on financial stability.

Keywords: banks; financial reporting; financial stability; regulatory capital; internal discipline; external discipline (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 M41 M48 (search for similar items in EconPapers)
Date: 2018
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