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Title:Transparency in the banking sector PDF Logo
Authors:Broll, Udo
Eckwert, Bernhard
Eickhoff, Andreas
Issue Date:2011
Series/Report no.:Dresden discussion paper series in economics 05/11
Abstract:The paper revisits the impact of uncertainty on the decision problem of a bank. The bank extends risky loans to private investors and sells deposits to savers at fixed rates. The uncertainty under which deposit/loan-portfolios are chosen by banks is endogenized through an information system that conveys public signals about the return distribution of bank loans. Transparency in the banking sector is defined in terms of the reliability of these signals. We find that higher transparency always raises expected bank profits, but may lead to a higher or lower expected loan volume. Moreover, higher transparency may reduce economic welfare.
Subjects:market transparency
banking firm
JEL:G21
G32
D81
Document Type:Working Paper
Appears in Collections:Dresden Discussion Paper Series in Economics, Faculty of Business and Economics, TU Dresden

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