How does banking market power affect bank opacity? Evidence from analysts' forecasts

Main author: Fosu, Samuel
Other authors: Danso, Albert
Agyei-Boapeah, Henry
Ntim, Collins G.
Murinde, Victor
Format: Journal Article           
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id eprints-26361
recordtype eprints
institution SOAS, University of London
collection SOAS Research Online
language English
language_search English
description Whilst the ongoing banking regulatory reforms towards a comprehensive Basel III framework emphasise bank transparency, disclosure and a competitive banking market environment, very little is known about the empirical relationship between bank opacity and banking competition. We investigate the impact of competition, as measured by the individual bank's pricing power in the banking market, on bank opacity using a large sample of US bank holding companies over the 1986–2015 period. We uncover new evidence, on the competition-bank opacity nexus, which suggests that banks with higher market power and operating in less competitive banking markets have lower analysts' forecast errors and dispersions and may thus be less opaque. This effect is more pronounced for the 2007–09 global financial crisis period. Our evidence is robust to controlling for analysts' characteristics, bank fixed-effects and endogeneity problems.
format Journal Article
author Fosu, Samuel
author_facet Fosu, Samuel
Danso, Albert
Agyei-Boapeah, Henry
Ntim, Collins G.
Murinde, Victor
authorStr Fosu, Samuel
author_letter Fosu, Samuel
author2 Danso, Albert
Agyei-Boapeah, Henry
Ntim, Collins G.
Murinde, Victor
author2Str Danso, Albert
Agyei-Boapeah, Henry
Ntim, Collins G.
Murinde, Victor
title How does banking market power affect bank opacity? Evidence from analysts' forecasts
publisher Elsevier
publishDate 2018
url https://eprints.soas.ac.uk/26361/