Competition Opacity_IRFA.pdf (659.74 kB)
How does banking market power affect bank opacity? Evidence from analysts’ forecasts
journal contribution
posted on 2023-06-10, 03:30 authored by Samuel FosuSamuel Fosu, Albert Danso, Henry Agyei-Boapeah, Collins G Ntim, Victor MurindeWhilst the ongoing banking regulatory reforms towards a comprehensive Basel III framework emphasise disclosure, transparency 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.
History
Publication status
- Published
File Version
- Accepted version
Journal
International Review of Financial AnalysisISSN
1057-5219Publisher
ElsevierExternal DOI
Volume
60Page range
38-52Department affiliated with
- Accounting and Finance Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2022-05-11First Open Access (FOA) Date
2022-05-11First Compliant Deposit (FCD) Date
2022-05-11Usage metrics
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