Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/70534

Banks and their Supranational Monitors — Do Monitoring Trustees Impact the Transparency of Banks?

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Title:Banks and their Supranational Monitors — Do Monitoring Trustees Impact the Transparency of Banks?
Authors:Janja Brendel
Keywords:Banks
State Aid
Regulation
Loan Loss Provisions
Date Issued:15 Aug 2020
Abstract:The last financial crisis saw large amounts of taxpayers' money used to save banks. Given the incentives of banks to offer an obfuscated view of their financial health, I investigate in this paper whether banks that receive state aid become more transparent when a supranational monitoring trustee (MT) is assigned to the bank, compared to banks without these monitors. Using a hand-collected sample of European banks that obtained state aid at different times in different countries, the staggered introduction of the MTs allows for a difference in differences analysis of the impact of the MT on financial reporting transparency. The MTs presence is associated with higher levels of loan loss provisions and loan loss provisions are recognized in a timelier manner. Banks with MTs are also more likely to restate their financial statements. In a subsample analyses of listed banks, credit risk disclosures of banks with MTs do not differ significantly from banks without MTs. However, banks that disclose the presence of an MT in their annual reports tend to have significantly lower credit risk disclosure scores than the banks that do not disclose their presence.
URI:http://hdl.handle.net/10125/70534
Appears in Collections: 13 Financial Accounting 6: Bank


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