Market discipline, disclosure and moral hazard in banking

Nier, Erlend; Baumann, Ursel

doi:10.1016/j.jfi.2006.03.001

Cited by 490 publications

(251 citation statements)

References 30 publications

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“…Excluding the SDIF banks, the relation turns out to be significantly positive (p-value: 0.002) suggesting that information asymmetries may lead to an increase in retained earnings that cause to an increase in capital ratio as also reported by Berger (1995), Nier and Baumann (2006) and Flannery and Rangan (2008). The relation of capital buffer and NPL is found significantly negative (p-value: 0.000), indicating that the higher the banks risk preferences, the lower the capital buffers they hold.…”

Section: Resultsmentioning

confidence: 66%

“…Alfon et al (2005), Ayuso et al (2004) and Boucinha (2008) recorded negative relation between ROE and capital. On the contrary, Berger (1995), Nier and Baumann (2006) and Flannery and Rangan (2008) found a positive relation between ROE and the cost of capital. When there is information asymmetry, a significant proportion of fluctuations in bank earnings tend to be kept as retained earnings, which in turn will cause an increase in capital ratio.…”

Section: Methodsmentioning

confidence: 78%

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The Determinants of Capital Buffer in the Turkish Banking System

Atici¹,

Gürsoy²

2012

IBR

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The purpose of this study is to analyze the determinants of capital buffer in the Turkish Banking system and to estimate the cyclicality of capital buffer using a panel data of 87 banks covering the period 1988-2009. The data is based on the reports published by the Banks Association of Turkey. Two-step Generalized Method of Moments is implemented by using Arellano-Bond linear dynamic panel-data estimator. The study is focused on: i) economic growth, ii) asset size, iii) return on equity and iv) non-performing loans as the determinants of capital buffer. It is observed that commercial banks, including the banks under the control of Savings Deposit and Insurance Fund, move procyclically, where commercial banks, excluding the banks under Savings Deposit and Insurance Fund, fluctuate countercyclically. This finding is noteworthy since it is parallel to BASEL III, where structuring a countercyclical capital framework is emphasized.

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Section: Resultsmentioning

confidence: 66%

Section: Methodsmentioning

confidence: 78%

The Determinants of Capital Buffer in the Turkish Banking System

Atici¹,

Gürsoy²

2012

IBR

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“…Many studies have suggested a correlation between the excessive risk taking behaviors of financial institutions with the opacity and complexity of their activities (Dhouibi et al 2016;Bushman, 2016;Mehran & Mollineaux, 2012;Nier & Baumann, 2006). The studies listed have highlighted the importance in the role of transparency and understandability towards enhancing market discipline of financial institutions, which will in turn limit their risky behaviors.…”

Section: Role Of Information and Disclosures In Mitigating Excessive mentioning

confidence: 99%

“…The studies listed have highlighted the importance in the role of transparency and understandability towards enhancing market discipline of financial institutions, which will in turn limit their risky behaviors. According to Nier & Baumann (2006), market discipline can serve as a mechanism which will curb their intention to undergo excessively risky investment decisions, by making such activities more costly. This is based on the belief that market participants, which include but not limited to shareholders and investors, will likely react and exert pressure to financial institutions when they are undergoing extremely risky behaviors.…”

Section: Role Of Information and Disclosures In Mitigating Excessive mentioning

confidence: 99%

An Analysis of XBRL Adoption Towards Systemic Risk of Financial Institutions Listed in NYSE

Suwardi¹,

Tohang²

2017

AABFJ

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This research aims to test the impact of the mandatory adoption of XBRL towards the systemic risk of American financial institutions listed in New York Stock Exchange (NYSE) by utilizing 45 NYSE listed financial institutions for the time period of [2007][2008][2009][2010][2011][2012]. The measure of systemic risk is based on SRisk by Acharya et al. (2012) which is available in the NYU Stern V-Lab. XBRL is a dummy variable, in which 0 represents a pre XBRL adoption period (2007)(2008) while 1 represents an XBRL reporting environment (2011)(2012). It is further interacted with Corporate Governance, which is measured using an index developed by Brown & Caylor (2006). The result proves that XBRL do not significantly impact systemic risk of financial institutions listed in NYSE. The findings have been determined after having controlled firm size, capital ratio, leverage ratio and performance. KeywordsSystemic Risk, XBRL, Corporate Governance, Market Discipline, Financial Institution, Disclosure, NYSE, Risk Taking Cover Page FootnoteThis research focuses on the impact of XBRL towards systemic risk of financial institutions listed in NYSE. Apart from this, it will also test the impact of the adoption towards size, capital ratio, leverage and performance of the financial institutions. The sample includes all financial institutions listed in NYSE between the years of 2007-2012. The impact is determined by comparing the systemic risk of individual financial institutions pre and post the mandate of XBRL adoption in U.S. in 2009, in which the year 2009 and 2010 will be considered as transition periods due to the fact that XBRL is implemented through phased-in approach. Based on the data of 45 financial institutions, the findings will provide meaningful analysis and worthy discussions over the subject of XBRL. This research is expected to contribute to 1. Companies (Financial Institutions) Financial institutions that are committed towards improving their corporate governance, can utilize this research to have an idea regarding how XBRL can serve as the tool to improve their corporate governance while also mitigating risky behaviors (which in turn reduces systemic risk) in order to further maximize their shareholder values. 2. Investors This research has the potential to provide investors with new insights which can assist in their decision making particularly regarding financial institutions. They will be acquired with the knowledge that financial firms with XBRL in place will provide them with timely and accurate information, improving their decision making. XBRL enhances transparency of financial firms which means that investors will face less difficulty in analyzing the financial information and will be able to properly asses the risk associated in their investments. 3. Government (Regulatory Agencies) In understanding the impact of XBRL towards systemic risk in U.S. financial institutions, regulatory agencies all around the world that are facing similar problems can utilize the same tool in order to limit the ris...

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“…Nier and Baumann (2006) pointed that investors will punish banks that choose risky investments, and such reaction is likely to not happen or to be weak in two cases: lack of investors' knowledge, in regard to the risk profile of the bank (in the former case), and releasing limited information regarding the matter (in the latter one). Based on Nier and Baumann's argument, one can assume that management, which choosing risky investments, tends to conceal, partly or entirely, the related information.…”

mentioning

confidence: 99%

The Attitudes of Managers and Stakeholders towards Corporate Social and Environmental Disclosure

Elsakit¹,

Worthington²

2012

IJEF

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Many studies have been conducted in order to investigate the reasons behind the differences in corporate social and environmental disclosure (CSED) practices throughout the world. Firm's characteristics, corporate governance, and contextual factors are provided as influential determinants of the level and quality of CSED. The impact of these determinants can be seen in the attitudes and behaviours of the two main parties in the issue of CSED; information preparers and information users. The level and the quality of CSED made by companies can be justified by investigating and understanding what motivates their managers and stakeholders to involve in social and environmental issues. This paper presents the possible reasons which might be better looked at and investigated by researchers, in order to understand the current practices of CSED and to predict the future trend of such practices.

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Market discipline, disclosure and moral hazard in banking

Cited by 490 publications

References 30 publications

The Determinants of Capital Buffer in the Turkish Banking System

The Determinants of Capital Buffer in the Turkish Banking System

An Analysis of XBRL Adoption Towards Systemic Risk of Financial Institutions Listed in NYSE

The Attitudes of Managers and Stakeholders towards Corporate Social and Environmental Disclosure

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