The politics of bank opacity

• 成果类型: Article
• 署名作者: Yue, Heng; Zhang, Liandong; Zhong, Qinlin
• 署名单位: Singapore Management University; Fudan University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2021.101452
• 发表日期: 2022
• 关键词: enforcement actions; COMPETITION; SYSTEM; regulators; DISCRETION; contagion; POLICY

摘要

The distribution of power in the political system shapes the financial reporting opacity of banks. Specifically, banks located in states with senators on the Senate Banking Committee (BC senators) have greater abnormal loan loss provisions than banks in other states. The result is stronger for larger banks and banks with higher risk. In addition, BC senators have a negative effect on the likelihood of banks in their home states receiving enforcement actions, and, more importantly, this effect is stronger for more opaque banks. These findings suggest that politicians, regulators, and banks use opaque financial reporting to facilitate regulatory forbearance. Moreover, we show that opacity is a significant channel through which BC senators increase bank risk. During economic downturns, however, BC senators appear to promote bank opacity to encourage bank lending and create liquidity. Finally, the capital market does not penalize the reporting opacity of banks in states with BC senators.@ 2021 Elsevier B.V. All rights reserved.