DOES CORRUPTION-RELATED DISCLOSURE TRIGGER MARKET DISCIPLINE? EVIDENCE FROM THE BANKING SECTOR OF THE GIPSI COUNTRIES

Pablo de Andrã‰s (), Salvatore Polizzi, Enzo Scannella () and Nuria Suã Rez ()
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Pablo de Andrã‰s: Finance and Marketing Department, ECGI, Universidad Autónoma de Madrid, Francisco Tomás y Valiente, 5, 28049 Madrid, Spain
Salvatore Polizzi: Department of Economics, Business and Statistics, University of Palermo, Viale delle Scienze, Building n. 13, 90128 Palermo, Italy
Enzo Scannella: Department of Economics, Business and Statistics, University of Palermo, Viale delle Scienze, Building n. 13, 90128 Palermo, Italy
Nuria Suã Rez: Finance and Marketing Department, Universidad Autónoma de Madrid, Francisco Tomás y Valiente, 5, 28049 Madrid, Spain

Journal of Financial Management, Markets and Institutions (JFMMI), 2025, vol. 13, issue 01, 1-41

Abstract: This paper investigates the relationship between corruption-related disclosure in banking and the market discipline exercised by depositors. We examine to what extent depositors penalize banks that are opaque with reference to their corruption-related disclosures by demanding higher interest rates for their deposits. By focusing on the banking industry of the GIPSI countries (Greece, Ireland, Portugal, Spain and Italy), we show that banks which disclose less on corruption-related issues tend to be penalized by depositors, who ask for higher interest rates, likely to counterbalance the negative consequences of possible involvement of such banks in corruption scandals. These basic relationships are shaped by specific bank-level characteristics and by the features of each country in terms of institutional quality.

Keywords: Corruption; disclosure; market discipline; banking; GIPSI countries (search for similar items in EconPapers)
JEL-codes: G20 G30 K40 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S2282717X25500045

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