Information disclosure and bank risk-taking: Empirical evidence from Vietnam
DOI:
https://doi.org/10.15549/jeecar.v9i4.954Keywords:
Information disclosure, Transparency, Bank, Risk-taking, Vietnam.Abstract
This paper explores the impact of information disclosure and transparency on Vietnamese banks’ risk-taking by using the Generalized Method of Moments (GMM) approach with panel data of 28 Vietnamese commercial banks from 2007 to 2019. A notable new contribution of the study is authors constructed a disclosure index for Vietnamese banks and evaluate the impact of bank transparency on bank risk-taking through this index. Research results show that the more transparent and complete information a Vietnamese commercial bank discloses, the safer the bank is. Furthermore, the findings indicate that implementing Basel II improves the influence of transparency and information disclosure on commercial banks' Z-scores substantially.
References
Barth, J.R., Caprio, G., & Levine, R. (2001). The Regulation and Supervision of Banks around the World: A New Database. Brookings-Wharton Papers on Financial Services, 2001, No. 1, 183–240. DOI: https://doi.org/10.1353/pfs.2001.0003
Baumann, U., & Nier, E. (2003). Market Discipline and Financial Stability: Some Empirical Evidence. Bank of England Financial Stability Review, 14 June, 134–141.
Baumann, U., & Nier, E. (2004). Disclosure, Volatility, and Transparency: and Empirical Investigation into the Value of Bank Disclosure. Economic Policy Review, September, 31–45.
Botosan, C.A. (1997). Disclosure level and the cost of equity capital. Accounting Review, 72 (3), 323–349. https://www.jstor.org/stable/248475.
Bushman, R.M., & Smith, A. (2003). Financial accounting information, and corporate governance. Economic Policy Review, 9 (1), 32, pp. 65-87. https://doi.org/10.1016/S0165-4101(01)00027-1 DOI: https://doi.org/10.1016/S0165-4101(01)00027-1
Chen, L., Feldmann, A., & Tang, O. (2015), The relationship between disclosures of corporate social performance and financial performance: Evidences from GRI reports in manufacturing industry. International Journal of Production Economics, 170, 445–456. https://doi.org/10.1016/j.ijpe.2015.04.004 DOI: https://doi.org/10.1016/j.ijpe.2015.04.004
Cheynel, E. (2012). A theory of voluntary disclosure and cost of capital. Social Science Research Network.
Demirgüç-Kunt, A., Detragiache, E., & Tressel, T. (2008). Banking on the principles: Compliance with Basel Core Principles and bank soundness. Journal of Financial Intermediation, 17(4), 511–542. https://doi.org/10.1016/j.jfi.2007.10.003 DOI: https://doi.org/10.1016/j.jfi.2007.10.003
Douissa, I. Ben (2010). Measuring banking transparency in compliance with Basel II requirements. Verslo ir teis?s aktualijos, 6(1), 90–110. doi:10.5200/1822-9530.2011.05 DOI: https://doi.org/10.5200/1822-9530.2011.05
Doumpos, M., Gaganis, C., & Pasiouras, F. (2015). Central bank independence, financial supervision structure and bank soundness: An empirical analysis around the crisis. Journal of Banking and Finance, 61, S69–S83. https://doi.org/10.1016/j.jbankfin.2015.04.017 DOI: https://doi.org/10.1016/j.jbankfin.2015.04.017
Ertan, A., Loumioti, M., & Wittenberg-Moerman, R. (2017). Enhancing Loan Quality Through Transparency: Evidence from the European Central Bank Loan Level Reporting Initiative. Journal of Accounting Research, 55(4), 877–918. https://doi.org/10.1111/1475-679X.12162 DOI: https://doi.org/10.1111/1475-679X.12162
Fernández, A.I., González, F., & Suárez, N. (2016). Banking stability, competition, and economic volatility. Journal of Financial Stability, 22, 101–120. https://doi.org/10.1016/j.jfs.2016.01.005 DOI: https://doi.org/10.1016/j.jfs.2016.01.005
Fiordelisi, F., & Mare, D.S. (2014). Competition and financial stability in European cooperative banks. Journal of International Money and Finance, 45, 1–16. https://doi.org/10.1016/j.jimonfin.2014.02.008 DOI: https://doi.org/10.1016/j.jimonfin.2014.02.008
Flannery, M. J. (2001). The faces of “market discipline”. Journal of Financial Services Research, 20, pp.107-119. https://doi.org/10.1023/A:1012455806431 DOI: https://doi.org/10.1023/A:1012455806431
Flannery, M.J., & Thakor, A. V. (2004). Accounting, Transparency and Bank Stability. Journal of Financial Intermediation, 13(2), 293–296. DOI: https://doi.org/10.1016/j.jfi.2004.03.002
Freixas, X., & Laux, C. (2012). Disclosure, Transparency, and Market Discipline. SSRN Electronic Journal. Retrieved from: https://dx.doi.org/10.2139/ssrn.1964321 DOI: https://doi.org/10.2139/ssrn.1964321
Hanley, K.W. (2016). Dynamic Interpretation of Emerging Systemic Risks. SSRN Electronic Journal. DOI: https://doi.org/10.2139/ssrn.2792943
Hirtle, B. (2011). Public Disclosure, Risk, and Performance at Bank Holding Companies. Federal Reserve Bank of New York, Staff Report No. 293. https://dx.doi.org/10.2139/ssrn.1003219 DOI: https://doi.org/10.2139/ssrn.1003219
Hodgdon, C., et al. (2008). Compliance with IFRS disclosure requirements and individual analysts’ forecast errors. Journal of International Accounting, Auditing and Taxation, 17(1), pp.1–13. https://doi.org/10.1016/j.intaccaudtax.2008.01.002 DOI: https://doi.org/10.1016/j.intaccaudtax.2008.01.002
Hossain, M. (2008). The extent of disclosure in annual reports of banking companies: The case of India. European Journal of Scientific Research, 23(4), 659–680. http://hdl.handle.net/10576/10429
Huang, R. (2006). Bank Disclosure Index: Global Assessment of Bank Disclosure Practices. SSRN Electronic Journal. https://dx.doi.org/10.2139/ssrn.1425915 DOI: https://doi.org/10.2139/ssrn.1425915
Iren, P., Reichert, A.K., & Gramlich, D. (2014). Information disclosure, bank performance and bank stability. International Journal of Banking, Accounting and Finance, 5(4), 374–417. DOI: https://doi.org/10.1504/IJBAAF.2014.067027
Jones, J.S., Lee, W.Y., & Yeager, T.J. (2012). Opaque banks, price discovery, and financial instability. Journal of Financial Intermediation, 21(3), 383–408. https://doi.org/10.1016/j.jfi.2012.01.004 DOI: https://doi.org/10.1016/j.jfi.2012.01.004
Kane, E.J. (2004). Financial Regulation and Bank Safety Nets: An International Comparison. Working Paper Boston College.
Konishi, M., & Yasuda, Y. (2004). Factors affecting bank risk taking: Evidence from Japan. Journal of Banking & Finance, 28(1), 215-232. https://doi.org/10.1016/S0378-4266(02)00405-3 DOI: https://doi.org/10.1016/S0378-4266(02)00405-3
Kuranchie-Pong, L., Bokpin, G.A., & Andoh, C. (2016). Empirical evidence on disclosure and risk-taking of banks in Ghana. Journal of Financial Regulation and Compliance, 24(2), 197–212. https://doi.org/10.1108/JFRC-05-2015-0025 DOI: https://doi.org/10.1108/JFRC-05-2015-0025
Laeven, L., & Levine, R. (2009). Bank governance, regulation and risk taking. Journal of Financial Economics, 93(2), 259–275. https://doi.org/10.1016/j.jfineco.2008.09.003 DOI: https://doi.org/10.1016/j.jfineco.2008.09.003
Linsley, P.M., & Shrives, P.J. (2005). Transparency and the disclosure of risk information in the banking sector. Journal of Financial Regulation and Compliance, 13(3), 205–214. https://doi.org/10.1108/13581980510622063 DOI: https://doi.org/10.1108/13581980510622063
Nelson, P.J. (2001). Transparency mechanisms at the multilateral development banks. World Development, 29(11), 1835–1847. https://doi.org/10.1016/S0305-750X(01)00073-0 DOI: https://doi.org/10.1016/S0305-750X(01)00073-0
Nier, E., & Baumann, U. (2006). Market discipline, disclosure and moral hazard in banking. Journal of Financial Intermediation, 15(3), 332–361. https://doi.org/10.1016/j.jfi.2006.03.001 DOI: https://doi.org/10.1016/j.jfi.2006.03.001
Pham, M.H., Vuong, L.N., Nguyen, T.H.T. (2021). Construction of transparency and disclosure index for commercial banks in Vietnam. International Journal of Innovation, Creativity and Change, 15(3).
Putu, I., Sanjaya, S., & Young, L. (2012). Voluntary disclosure and earnings management at companies listed in Indonesia stock exchange. USA Business Review, 6, 361-395.
Tadesse, S. (2005). Financial Development and Technology. SSRN Electronic Journal. https://dx.doi.org/10.2139/ssrn.681562 DOI: https://doi.org/10.2139/ssrn.681562
Wang, Z., Chen, J., & Zhao, X. (2018). Risk Information Disclosure and Bank Soundness: Does Regulation Matter? Evidence from China. International Review of Finance, 20(4), 973–981. https://doi.org/10.1111/irfi.12244 DOI: https://doi.org/10.1111/irfi.12244
Downloads
Published
How to Cite
Issue
Section
License
The JEECAR journal allows the author(s) to hold the copyright and publishing rights of their own manuscript without restrictions.
This journal applies the Creative Attribution Common License to works we publish, and allows reuse and remixing of its content, in accordance with a CC-BY 4.0 license.
Authors are free to: Share — copy and redistribute the material in any medium or format and Adapt — remix, transform, and build upon the material for any purpose, even commercially.
Under the following terms: Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
No additional restrictions — The author may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
The JEECAR Journal is committed to the editorial principles of all aspects of publication ethics and publication malpractice as assigned by the Committee on Public Ethics.
