Public Disclosure and Bank Failures

Eduardo Levy Yeyati and Tito Cordella

No 1997/096, IMF Working Papers from International Monetary Fund

Abstract: This paper examines how public disclosure of banks’ risk exposure affects banks’ risk-taking incentives and assesses how the presence of informed depositors influences the soundness of the banking system. It finds that, when banks have complete control over the volatility of their loan portfolios, public disclosure reduces the probability of banking crises. However, when banks do not control their risk exposure, the presence of informed depositors may increase the probability of bank failures.

Keywords: WP; deposit rate; risk level; charter value; risk choice; loan portfolio; maximization problem; Deposit rates; Distressed institutions; Bank deposits; Bank credit; Commercial banks (search for similar items in EconPapers)
Pages: 25
Date: 1997-08-01
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Public Disclosure and Bank Failures (1998)
Working Paper: Public Disclosure and Bank Failures (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1997/096

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