How does banking market power affect bank opacity? Evidence from analysts’ forecasts
How does banking market power affect bank opacity? Evidence from analysts’ forecasts
Whilst the ongoing banking regulatory reforms towards a comprehensive Basel III framework emphasise bank transparency, disclosure and a competitive banking market environment, very little is known about the empirical relationship between bank opacity and banking competition. We investigate the impact of competition, as measured by the individual bank’s pricing power in the banking market, on bank opacity using a large sample of US bank holding companies over the 1986-2015 period. We uncover new evidence, on the competition-bank opacity nexus, which suggests that banks with higher market power and operating in less competitive banking markets have lower analysts’ forecast errors and dispersions and may thus be less opaque. This effect is more pronounced for the 2007-09 global financial crisis period. Our evidence is robust to controlling for analysts’ characteristics, bank fixed-effects and endogeneity problems.
Bank opacity, competition, financial crisis, disclosure and transparency, Basel III framework
38-52
Fosu, Samuel
20135acd-447a-44ab-b5c7-949477e89121
Agyei-Boapeah, Henry
37005f29-d453-458e-b6b5-cd92e55587a4
Danso, Albert
a78c616e-5975-49b3-825c-f3f6b617b02b
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Murinde, Victor
7a7f1f3a-def6-42ea-b135-133cf11a41f1
November 2018
Fosu, Samuel
20135acd-447a-44ab-b5c7-949477e89121
Agyei-Boapeah, Henry
37005f29-d453-458e-b6b5-cd92e55587a4
Danso, Albert
a78c616e-5975-49b3-825c-f3f6b617b02b
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Murinde, Victor
7a7f1f3a-def6-42ea-b135-133cf11a41f1
Fosu, Samuel, Agyei-Boapeah, Henry, Danso, Albert, Ntim, Collins and Murinde, Victor
(2018)
How does banking market power affect bank opacity? Evidence from analysts’ forecasts.
International Review of Financial Analysis, 60, .
(doi:10.1016/j.irfa.2018.08.015).
Abstract
Whilst the ongoing banking regulatory reforms towards a comprehensive Basel III framework emphasise bank transparency, disclosure and a competitive banking market environment, very little is known about the empirical relationship between bank opacity and banking competition. We investigate the impact of competition, as measured by the individual bank’s pricing power in the banking market, on bank opacity using a large sample of US bank holding companies over the 1986-2015 period. We uncover new evidence, on the competition-bank opacity nexus, which suggests that banks with higher market power and operating in less competitive banking markets have lower analysts’ forecast errors and dispersions and may thus be less opaque. This effect is more pronounced for the 2007-09 global financial crisis period. Our evidence is robust to controlling for analysts’ characteristics, bank fixed-effects and endogeneity problems.
Text
Competition Opacity
- Accepted Manuscript
More information
Accepted/In Press date: 26 August 2018
e-pub ahead of print date: 20 September 2018
Published date: November 2018
Keywords:
Bank opacity, competition, financial crisis, disclosure and transparency, Basel III framework
Identifiers
Local EPrints ID: 423487
URI: http://eprints.soton.ac.uk/id/eprint/423487
ISSN: 1057-5219
PURE UUID: 9e3a6a72-2bcf-4b30-8e80-f1136cef2a72
Catalogue record
Date deposited: 24 Sep 2018 16:30
Last modified: 16 Mar 2024 07:01
Export record
Altmetrics
Contributors
Author:
Samuel Fosu
Author:
Albert Danso
Author:
Victor Murinde
Download statistics
Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.
View more statistics
