Factors influencing voluntary disclosure in small U.S. banks within a market discipline framework

Khaldoon I. Al-Haddad and Ghassan H. Mardini

Journal of Financial Regulation and Compliance, 2026, vol. 34, issue 5, 824-846

Abstract: PurposeThis study aims to investigate the determinants of voluntary disclosure in US small banks, focusing on the impact of market discipline exerted by depositors. Using a regulatory change in 2017 that allowed small banks to choose between two quarterly reporting formats, the research examines how insured deposit concentration, capital strength and market competition influence disclosure decisions.Design/methodology/approachThis study leverages the 2017 introduction of the rationalized call report (Federal Financial Institutions Examination Council 051) for banks under $1bn in assets. Using data from the Wharton Research Data Services (WRDS) database, a sample of 5,131 eligible banks is constructed, excluding those with foreign branches, missing data or exceeding the asset threshold.FindingsThe findings indicate that banks with higher insured deposits, stronger capital buffers and operating in less competitive markets are more likely to reduce their disclosure levels. This behavior is attributed to the reduced market discipline faced by these banks.Originality/valueThis study contributes to the literature by highlighting the unique characteristics of small banks and their disclosure policies under market discipline, offering insights into future regulatory and disclosure practices.

Keywords: Voluntary disclosure; Market discipline; Banks; Insured deposits; Uninsured deposits (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:jfrc-06-2025-0161

DOI: 10.1108/JFRC-06-2025-0161

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