Dai, Liang;
Luo, Dan;
Yang, Ming;
(2023)
Disclosure of Bank-Specific Information and the Stability of Financial Systems.
The Review of Financial Studies
, Article hhad089. 10.1093/rfs/hhad089.
(In press).
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Abstract
We find that disclosing bank-specific information reallocates systemic risk, but whether it mitigates systemic bank runs depends on the nature of information disclosed. Disclosure reveals banks’ resilience to adverse shocks and shifts systemic risk from weak to strong banks. Yet, only disclosure of banks’ exposure to systemic risk can mitigate systemic bank runs because it shifts systemic risk from more vulnerable banks to those less vulnerable. Disclosure of banks’ idiosyncratic shortfalls of funds does not differentiate such exposure, rendering the resultant reallocation of systemic risk ineffective in mitigating systemic runs.
| Type: | Article |
|---|---|
| Title: | Disclosure of Bank-Specific Information and the Stability of Financial Systems |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1093/rfs/hhad089 |
| Publisher version: | https://doi.org/10.1093/rfs/hhad089 |
| Language: | English |
| Additional information: | © The Author(s), 2023. This is an open access article distributed under the terms of the Creative Commons Attribution-Non Commercial-No Derivatives License 4.0 (CC-BY-NC-ND), where it is permissible to download and share the work provided it is properly cited. The work cannot be changed in any way or used commercially without permission from the journal. http://creativecommons.org/licenses/by-nc-nd/4.0/ |
| Keywords: | information design, global games with heterogeneous agents, financial stability |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10178366 |
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