Is accounting enforcement related to risk-taking in the banking industry?
Lorenzo Dal Maso,
Gerald J. Lobo and
Journal of Financial Stability, 2020, vol. 49, issue C
Using a sample of banks from 36 countries, we document that accounting enforcement is negatively related to bank risk-taking. We also provide evidence that accounting enforcement enhances bank stability during the crisis. In addition, we show that banks assume less risk through more conservative lending decisions and a reduction in complexity in jurisdictions with higher accounting enforcement. Our results show that formal institutions such as accounting enforcement are associated with bank financial decisions and risk-taking behavior.
Keywords: Accounting Enforcement; Bank Risk-taking; Bank Complexity; Bank Reporting Discretion (search for similar items in EconPapers)
JEL-codes: G21 G28 M41 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:49:y:2020:i:c:s1572308920300577
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