Abstract
This paper examines whether bank financial reporting opacity increases agency cost between bank managers and uninsured depositors. In particular, following calls from prior research, I investigate the effects of reporting opacity on this critical source of bank financing, which represents over $5 trillion at 2019. Using quarterly regulatory filings of federally-insured US commercial banks, I confirm a predicted negative association between uninsured deposits and larger delays in expected loss recognition, my proxy for reporting opacity. I also document expected cross-sectional variation, with this negative association accentuated for banks that are not too-big-to-fail (as these lack the implicit government guarantees of too-big-to-fail banks), and some evidence for banks that are not publicly-traded (which have lower overall reporting and disclosure quality relative to publicly-traded banks). The results are consistent with monitoring by uninsured depositors, such that stronger reporting transparency enables banks to attract higher levels of uninsured deposits.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
