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- W1569778679 abstract "Following Pillar 3 of the new Basel Capital Adequacy Proposals (Basel II), weanalyse the effects of disclosure in the banking sector in a stylised setting of delegatedportfolio management. We first consider the interaction between the shareholderand the manager of a bank -the manager has to exert risk monitoring effort in orderto decrease the bank�s probability of default. Disclosure is captured through a signalabout the manager�s effort and it is shown that the shareholder desires full disclosure(a perfect signal) so as to implement the first best level of effort. We then introducea third stakeholder that has fixed claims on the bank, the debt-holder. This agentintroduces a counteracting effect: the shareholder may not desire full disclosure anymoregiven that a lower level of disclosure allows the bank to improve its perceivedprobability of default, which in turn decreases its financing costs. This implies that subordinated debt itself may not increase the soundness of the banking sector unlessit is accompanied by measures of compulsory disclosure." @default.
- W1569778679 created "2016-06-24" @default.
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- W1569778679 date "2005-01-01" @default.
- W1569778679 modified "2023-09-26" @default.
- W1569778679 title "On Bank Disclosure and Subordinated debt" @default.
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