Financial distress and banks' communication policy in crisis times
Damien Besancenot () and
Radu Vranceanu ()
No DR 08018, ESSEC Working Papers from ESSEC Research Center, ESSEC Business School
This short paper analyzes banks' communication policies in crisis times and the role of imperfect information in enhancing banks' distress. If banks differ in their exposure to risky assets, fragile banks may claim to be solid only in order to manipulate investors' expectations. Then solid banks must pay a larger interest rate than in a perfect information set-up. A stronger sanction for false information would improve the situation of the low-risk banks but deteriorate the situation of the high-risk banks. The total effect on defaulting credit institutions is ambiguous. It is shown that, in some cases, the optimal sanction is lower than the sanction that rules out any manipulatory behaviour.
Keywords: Banks; Disclosure; Financial Crisis; Transparency (search for similar items in EconPapers)
JEL-codes: D82 E44 G21 (search for similar items in EconPapers)
Pages: 18 pages
New Economics Papers: this item is included in nep-ban, nep-cta, nep-fmk and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.essec.fr/faculty/showDeclFileRes.do?declId=8099&key=__workpaper__ [301 Moved Permanently]--> https://www.essec.edu/fr/faculty/showDeclFileRes.do?declId=8099&key=__workpaper__)
Journal Article: Financial Distress And Banks'communication Policy In Crisis Times (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ebg:essewp:dr-08018
Access Statistics for this paper
More papers in ESSEC Working Papers from ESSEC Research Center, ESSEC Business School ESSEC Research Center, BP 105, 95021 Cergy, France. Contact information at EDIRC.
Bibliographic data for series maintained by Sophie Magnanou ().