Competition and Bank Opacity

Liangliang Jiang; Ross Levine; Chen Lin

doi:10.3386/w20760

Competition and Bank Opacity

Liangliang Jiang, Ross Levine & Chen Lin

Working Paper 20760

DOI 10.3386/w20760

Issue Date December 2014

Did regulatory reforms that lowered barriers to competition among U.S. banks increase or decrease the quality of information that banks disclose to the public and regulators? We find that an intensification of competition reduced abnormal accruals of loan loss provisions and the frequency with which banks restate financial statements. The results indicate that competition reduces bank opacity, enhancing the ability of markets and regulators to monitor banks.

We thank Patricia Dechow, David De Meza, Yaniv Konchitchki, Xu Li, Chul Park, Yona Rubinstein, John Sutton, Richard Sloan, Feng Tian, John Van Reenen, Xin Wang and seminar participants at the Federal Reserve Bank at Saint Louis, the London School of Economics, University of California, Berkeley and University of Hong Kong for helpful comments and discussions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
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Competition and Bank Opacity

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