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Information Disclosure and Banking Sector Performance and Stability

Iren, Perihan
http://rave.ohiolink.edu/etdc/view?acc_num=csu1277996727

Abstract Details

2010, Doctor of Business Administration, Cleveland State University, Nance College of Business Administration.
Over the last decade, financial and capital markets have grown very rapidly and the markets have become more complex as a result of increased used of derivative securities. The recent subprime crisis has intensified the debate regarding the need for greater transparency. The purpose of this study is to contribute to this debate by examining the relationship between the quantity and quality of information disclosure regarding a bank’s securitization and credit derivative activities and the subsequent impact on bank performance and stability. The results show a significant relationship between the quality/quantity of disclosure and bank performance/stability. When information on securitization and credit derivative activities are disclosed on call reports and annual reports, performance/stability initially decreases. After a bank establishes certain setup, equipment, personnel and expertise on these activities, performance/stability starts to increase. The results also show that increases in disclosure/activity have an asymmetrical impact on bank performance and stability compared to decreases in disclosure; bank performance measures are more sensitive to disclosure than stability measures; the financial markets are more sensitive to changes in quantitative measures of disclosure/activity compared to qualitative measures; and the financial markets show the greatest reaction to changes in the level of disclosure/activity by money center banks, followed by regional banks. The empirical results show that even when the level of financial activity had not changed, an increase in the detail describing the activity was followed by a significant reaction in the market. Examining the bank’s annual report, it appears that an extensive discussion of their securitization and credit derivatives activities tends to increase stock price volatility, Analysis of the effects of the quality of disclosure shows that low quality information decreases performance but has no effect on stability. Also, the results show that highly transparent banks are riskier than their less transparent peers. A comparison of troubled and healthy banks in terms of their information disclosure surprisingly reveals that troubled banks are more transparent than healthy banks. Greater disclosure regarding their securitization and credit derivative activities submitted on regulatory reports, as well as extensive coverage of credit derivatives in annual reports, increases the probability of an institution being classified as a “troubled” bank.
Alan Reichert (Committee Chair)
Kenneth Borokhovich (Committee Member)
Walter Rom (Committee Member)
Dieter Gramlich (Committee Member)
196 p.
Finance
bank; DISCLOSURE; securitization; SSBI; DARI; credit derivative; ROA

Recommended Citations

Citations

  • Iren, P. (2010). Information Disclosure and Banking Sector Performance and Stability [Doctoral dissertation, Cleveland State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=csu1277996727

    APA Style (7th edition)

  • Iren, Perihan. Information Disclosure and Banking Sector Performance and Stability. 2010. Cleveland State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=csu1277996727.

    MLA Style (8th edition)

  • Iren, Perihan. "Information Disclosure and Banking Sector Performance and Stability." Doctoral dissertation, Cleveland State University, 2010. http://rave.ohiolink.edu/etdc/view?acc_num=csu1277996727

    Chicago Manual of Style (17th edition)

csu1277996727
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© 2010, all rights reserved.
This open access ETD is published by Cleveland State University and OhioLINK.