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Market Discipline, Public Disclosure and Financial Stability

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The Handbook of Post Crisis Financial Modeling

Abstract

Inadequate disclosure by commercial banks has been cited as a contributing factor to the financial crisis. Banks did not report enough information about the assets they were holding or the risks that they were exposed to, and inadequate disclosure meant that investors were less able to judge risks to a bank’s solvency than bank insiders, such as managers. Investors did not demand sufficient disclosure prior to the crisis. Possible reasons for this include risk illusion, or expectations that governments would be willing and able to bail out failing banks.

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Authors
  1. Rhiannon Sowerbutts
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  2. Peter Zimmerman
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Editor information

Editors and Affiliations

  1. School of Management and Institute of Finance, University of Leicester, UK

    Emmanuel Haven (Professor) (Professor)

  2. College of Business, Law, Education and Social Science, Bangor University, UK

    Philip Molyneux (Dean) (Dean)

  3. University of St Andrews, UK

    John O. S. Wilson (Professor of Banking and Finance) (Professor of Banking and Finance)

  4. University of Manchester, UK

    Sergei Fedotov (Professor of Applied Mathematics) (Professor of Applied Mathematics)

  5. Hull University Business School, UK

    Meryem Duygun (Professor of Banking and Finance) (Professor of Banking and Finance)

Copyright information

© 2016 Rhiannon Sowerbutts and Peter Zimmerman

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Cite this chapter

Sowerbutts, R., Zimmerman, P. (2016). Market Discipline, Public Disclosure and Financial Stability. In: Haven, E., Molyneux, P., Wilson, J.O.S., Fedotov, S., Duygun, M. (eds) The Handbook of Post Crisis Financial Modeling. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-137-49449-8_3

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