{"title":"Precision of Public Information Disclosures, Banks' Stability, and Welfare","authors":"DIEGO MORENO, TUOMAS TAKALO","doi":"10.1111/jmcb.13194","DOIUrl":null,"url":null,"abstract":"Consider a bank which chooses an asset portfolio and then, upon the public disclosure of the results of a review of its quality, raises funds by offering a repayment promise. We show that increasing the precision of information about the quality of the bank's assets lowers the cost of funding of a sound bank and encourages it to take risk. Maximum stability is reached in an opaque environment. Maximum surplus is reached in an opaque (transparent) environment when the social costs of bank failure are large (small). We examine how these conclusions change under alternative information and contractual conditions.","PeriodicalId":1,"journal":{"name":"Accounts of Chemical Research","volume":null,"pages":null},"PeriodicalIF":16.4000,"publicationDate":"2024-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Accounts of Chemical Research","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1111/jmcb.13194","RegionNum":1,"RegionCategory":"化学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"CHEMISTRY, MULTIDISCIPLINARY","Score":null,"Total":0}
引用次数: 0
Abstract
Consider a bank which chooses an asset portfolio and then, upon the public disclosure of the results of a review of its quality, raises funds by offering a repayment promise. We show that increasing the precision of information about the quality of the bank's assets lowers the cost of funding of a sound bank and encourages it to take risk. Maximum stability is reached in an opaque environment. Maximum surplus is reached in an opaque (transparent) environment when the social costs of bank failure are large (small). We examine how these conclusions change under alternative information and contractual conditions.
期刊介绍:
Accounts of Chemical Research presents short, concise and critical articles offering easy-to-read overviews of basic research and applications in all areas of chemistry and biochemistry. These short reviews focus on research from the author’s own laboratory and are designed to teach the reader about a research project. In addition, Accounts of Chemical Research publishes commentaries that give an informed opinion on a current research problem. Special Issues online are devoted to a single topic of unusual activity and significance.
Accounts of Chemical Research replaces the traditional article abstract with an article "Conspectus." These entries synopsize the research affording the reader a closer look at the content and significance of an article. Through this provision of a more detailed description of the article contents, the Conspectus enhances the article's discoverability by search engines and the exposure for the research.