EconPapers    
Economics at your fingertips  
 

The 2007–2009 financial crisis and bank opaqueness

Mark Flannery, Simon Kwan and Mahendrarajah Nimalendran

Journal of Financial Intermediation, 2013, vol. 22, issue 1, 55-84

Abstract: Doubts about the accuracy with which outside investors can assess a banking firm’s value motivate many government interventions in the banking market. Although the available empirical evidence is somewhat mixed, the recent financial crisis has reinforced a common assessment that banks are unusually opaque. This paper examines bank equity’s trading characteristics during “normal” periods and two “crisis” periods between 1993 and 2009. We find only limited (mixed) evidence that banks are unusually opaque during normal periods. However, consistent with theory, crises raise the adverse selection costs of trading bank shares relative to those of nonbank control firms. A bank’s balance sheet composition significantly affects its equity opacity, but we cannot detect specific balance sheet categories that have robust effects.

Keywords: Banks; Opaque; Microstructure; Crisis (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (63) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042957312000368
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:22:y:2013:i:1:p:55-84

DOI: 10.1016/j.jfi.2012.08.001

Access Statistics for this article

Journal of Financial Intermediation is currently edited by Elu von Thadden

More articles in Journal of Financial Intermediation from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-08-02
Handle: RePEc:eee:jfinin:v:22:y:2013:i:1:p:55-84