Enhancing Loan Quality Through Transparency: Evidence from the European Central Bank Loan Level Reporting Initiative

• 成果类型: Article
• 署名作者: Ertan, Aytekin; Loumioti, Maria; Wittenberg-Moerman, Regina
• 署名单位: University of London; London Business School; University of Texas System; University of Texas Dallas; University of Southern California
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12162
• 发表日期: 2017
• 页码: 877-918
• 关键词: market discipline; disclosure; RISK; INFORMATION

摘要

We explore whether transparency in banks' securitization activities enhances loan quality. We take advantage of a novel disclosure initiative introduced by the European Central Bank, which requires, as of January 2013, banks that use their asset-backed securities as collateral for repo financing to report securitized loan characteristics and performance in a standardized format. We find that securitized loans originated under the transparency regime are of better quality with a lower default probability, a lower delinquent amount, fewer days in delinquency, and lower losses upon default. Additionally, banks with more intensive loan level information collection and those operating under stronger market discipline experience greater improvement in their loan quality under the new reporting standards. Overall, we demonstrate that greater transparency has real effects by incentivizing banks to improve their credit practices.