Thursday, April 23, 2015

Competition and Bank Opacity

Liangliang Jiang, Ross Levine, and Chen Lin analyze Competition and Bank Opacity.

ABSTRACT: Did regulatory reforms that lowered barriers to competition among U.S. banks increase or decrease the quality of information that banks disclose to the public and regulators? We find that an intensification of competition reduced abnormal accruals of loan loss provisions and the frequency with which banks restate financial statements. The results indicate that competition reduces bank opacity, enhancing the ability of markets and regulators to monitor banks.

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