Precision of Public Information Disclosures, Banks’ Stability and Welfare

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dc.contributor Bank of Finland
dc.contributor.author Moreno, Diego
dc.contributor.author Takalo, Tuomas
dc.date.accessioned 2021-03-04T13:37:48Z
dc.date.available 2021-03-04T13:37:48Z
dc.date.issued 2021
dc.identifier.isbn 978-952-323-368-3
dc.identifier.issn 1456-6184
dc.identifier.uri https://helda.helsinki.fi/bof/handle/123456789/17890
dc.description.abstract We study the optimal precision of public information disclosures about banks assets quality. In our model the precision of information affects banks' cost of raising funding and asset profile riskiness. In an imperfectly competitive banking sector, banks'stability and social surplus are non-monotonic functions of precision: an intermediate precision (or low-to-intermediate precision if banks contract their repayment promises on public information) maximizes stability, and also yields the maximum surplus when the social cost of bank failure c is large. When c is small and the banks' asset risk taking is not too sensitive to changes in the precision, the maximum surplus (and maximum risk) are reached at maximal precision. In a perfectly competitive banking sector in which banks' asset risk taking is not too sensitive to the precision of information, the maximum surplus (and maximum risk) are reached at maximal precision, while maximum stability is reached at minimal precision.
dc.format.extent 49
dc.language.iso ENG
dc.rights https://helda.helsinki.fi/bof/copyright
dc.subject stressitestit
dc.subject vakaus
dc.subject.other financial stability
dc.subject.other stress tests
dc.subject.other bank transparency
dc.subject.other banking regulation
dc.title Precision of Public Information Disclosures, Banks’ Stability and Welfare
dc.type Paper
dc.identifier.urn URN:NBN:fi:bof-202103041120
dc.subject.jel G21
dc.subject.jel G28
dc.subject.jel D83
dc.series.name Bank of Finland Research Discussion Papers
dc.series.year 2021
dc.series.number 3/2021
dc.series.sortingnumber 0003
dc.date.publication 4.3.2021
dc.subject.yso pankit
dc.subject.yso sääntely
dc.subject.yso kilpailu (toiminta)
dc.subject.yso riskit
dc.subject.yso informaatio
bof-internal.includedInCRIS 1
dc.type.okm D4

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