Abstract
The paper examines the interest of the commercial banks’ stakeholders in Pillar 3 disclosures and their behaviour during the timing of serious market turbulence. The aim is to discover to which extent current banking regulation supports stakeholders’ interest in the information required by regulators to be disclosed. The examined data consists of log files that were pre-processed using web mining techniques and from which were extracted frequent item sets by quarters and evaluated in terms of quantity. The authors have proposed a methodology to evaluate frequent item sets of web parts over a dedicated time. Based on the verification of applied methodology on two commercial banks, the results show that stakeholders’ interest in disclosures is highest in the first quarter at each year and after turbulent times in 2009 their interests decreased. Moreover, the results suggest that stakeholders expressed higher interest than in regulatory required Pillar 3 information in the following group of information: Pillar3 related information, Annual reports, Information on Group. Following our results, the paper contributes to cover the gap in the research by analysing Pillar 3 disclosures and their compliance with regulatory requirements, which also increase the interest of the relevant stakeholders to conduce them as an effective market discipline tool.
Highlights
In the recent post-financial crisis years, significant changes have occurred in financial markets regulation and supervision
The disclosure of commercial banks is of particular importance for their stakeholders
In the process of the search for meaningful Pillar 3 disclosures as a direct channel for market discipline implementation, it is important to take into account a lot of factors, which influence their quality
Summary
In the recent post-financial crisis years, significant changes have occurred in financial markets regulation and supervision. The financial institutions face challenges as reduction of risk-taking in line with tightening of regulatory requirements and the increase of regulatory directives and guidelines published by the European authorities. These directives cover primarily risk areas related to capital, liquidity, credit, counterparty exposures, market, operational and securitisation. They aim to eliminate systemic risk through supervision and more importantly to reinforce market discipline [1]. Market discipline as one of the three pillars of the stable financial market (the other two are regulation and supervision) has been in regulatory interest since 2001. The issuance of Basel II and Basel III regulations has built in market discipline into the regulatory
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