Abstract
This study investigates the extent of credit risk disclosure and the effects of bank-specific attributes on the disclosure level of Saudi listed banks. The study considers the content analysis of 12 Saudi listed banks from 2016 to 2020. A comprehensive credit risk disclosure index is developed, covering seven dimensions to measure the levels of credit risk disclosure. The generalized linear model is used to examine whether bank-specific attributes could explain any differences in disclosure levels among banks. This research provides evidence that although banks have similar regulatory requirements, they differ in their credit risk disclosure. The empirical results indicate that few bank-specific attributes significantly influence the risk disclosure. Bank size and leverage positively affect risk disclosure. Therefore, banks’ asset size is a key factor in all risk disclosure categories. In contrast, the results show that a bank’s age and profitability have no impact on the level of credit risk disclosure. This paper contributes to the risk disclosure literature in Saudi Arabia. Understanding factors that affect the level of credit risk disclosure might help the regulators to formulate strategies and policies, enabling shareholders and investors to make informed decisions.
Highlights
No doubt, the management of bank risk is vital to the potent operation of the financial system (Berger et al, 2017)
This study examines the correlation between bank size and credit risk disclosure using the following hypothesis: (H1): There is a positive association between credit risk disclosure and bank size
The results show that bank attributes aggregately influence the quality of credit risk disclosure
Summary
The management of bank risk is vital to the potent operation of the financial system (Berger et al, 2017). A robust internal bank control system assists in protecting a bank against expected losses from several risks (Dionne, 2013). Credit risks are considered the most dominant risk in the banking environment since credit operations inside banks are the most attractive investment to achieve profits (Abed et al, 2016). Most of the financial statement‘s content has the drawback ofhysteresis‘ (Beneish et al, 2015). This financial statement information can describe historical profiles of bank risk and neglect future bank risk conditions
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